The metro Denver real estate market is constantly changing, so of course, DO YOUR RESEARCH! DO NOT jump the gun on this one! Unbiased advice from family and peers may be kind, but you are the only one who knows what your needs are when it comes to buying a home.
WHAT MADE YOU CONSIDER OWNING A HOME?
Forget finances for a minute and focus on what made you consider even buying a home in metro Denver the first place!
· Is your family expanding?
· Does your family feel safe?
· Is there a STELLAR school system in the area so your children can get the education they deserve?
· How about that unbearable landlord?
WHICH WAY IS THE REAL ESTATE MARKET GOING?
DON’T SLEEP ON YOUR DECISION TOO LONG! Home prices are on the rise! Not only are they on their way back up, but these increases are happening monthly.
Don’t believe us? According to Existing Homes Sales Report from the National Association of Realtors (NAR), the average price of homes in May 2017 went up 5.8% from last year.
If you wait until next year to buy, you might be scrapping for change in the cushions, to say the least! Not only will it cost you more to buy, but you will also need to increase your down payment to account for the higher price of the home.
Colorado Contract Explained
Below is an overview of the Colorado Commission-approved “Contract to Buy and Sell Real Estate”. Please go to the Denver Real Estate Commission website to review the entire Contract and corresponding updates. In Colorado, Contracts concerning real property must be in writing to be enforceable.
Once the Contract is executed (signed by all parties and earnest money delivered) any changes to the contract must be in writing, signed by all parties and delivered via “written notice” within the deadlines set forth in the Contract.
The Contract states, “This form has important legal consequences and the parties should consult legal and tax or other counsel before signing.” While Denver custom in buying and selling residential real estate does not typically involve an attorney or other counsel, the Colorado Real Estate Commission mandates that every real estate agent advise Buyers and Sellers to so.
For simplification purposes, the following overview refers to “conventional loans” only.
- Colorado Contract to Purchase
- General Overview
This section identifies how you wish your legal name to appear on the contract and in which way you wish to take the title. Remember that you’ll need to sign exactly as stated in the Contract on all documents from addendums to Closing. The next portion identifies how you wish to take the title with the three choices as joint tenants, tenants in common or “other” which called “tenant severalty” or solely. Finally, the property’s legal description and physical street address are noted.
Dates and Deadlines
This section outlines the deadlines, ranging from the loan application deadline to the inspection objection deadline to the Closing...
Step #5: Customary Buyer Closing Costs
The list below outlines what you can expect in “Closing fees” in the Denver-metro area. These items are in addition to your down payment and include pre-paid items (pro-rated fees paid in advance) and overall expenses.
Amounts are estimates and contingent upon factors such as loan type, square footage, and price of the home. Your Closing fees will usually amount to 2-3% of the purchase price for pre-paid items and additional expenses. On occasion, and depending on the market conditions and purchase price, a Buyer may also ask the Seller to pay for some of the Closing costs.
- Loan Origination Fee – usually amounts to 1% of the purchase price
- Loan Discount Points – varies with market conditions and each point is 1% of the loan amount
- Credit Report – $50.00
- Loan Underwriting Fee – depends on the loan amount
- Appraisal Fee – starting at about $600.00
- Mortgage Broker Fee – varies with market conditions
- Tax Related Service Fee – approximately $100.00
- Processing Fee – approximately $299.00
Home Owner’s Association Fees
- HOA Transfer Fee – Depends on the association(s)
- Closing Fee – approximately $450 and usually split between buyer and seller
- Loan Prep Fees – typically $200.00
- Notary Fees - $50 is a good estimate
- Recording Fees – approximately $100.00
- City/County Tax Fees – approximately $35.00
- State Tax Stamps...
Finding Your New Denver Home
We Can Help!
As an exclusive Buyer’s agent, I represent YOU in this transaction. Accordingly, I will thoroughly monitor every stage of the process, from finding the perfect home and negotiating the deal to meeting deadlines while under contract and representing you at the Closing table. I am a full-time, highly ethical, dedicated real estate professional who wants to partner with you for a positive home buying experience.
Home Search Process
Initially, we’ll meet in person to define your wants and needs in a home as well as in a neighborhood. I’ll come prepared to do some serious listening! Based on your requirements, I will send you a daily list of homes from the Denver MLS that meet your criteria. Once we find five homes of interest, we’ll visit and compare them. During this time, please share feedback on what you love and don’t love about the homes, as this will greatly assist me in further narrowing down your selection. We will repeat this process until you find your perfect home!?Once you find THE home, I will complete a comprehensive comparative market analysis to assist in determining an offer price. I will then prepare an offer for your review and signature (electronic or physical). Earnest money, typically in the form of a personal check, must accompany the offer as it proves “consideration”.
Click below for all of the steps:
Step #1: Buying a Home in Denver, CO.
Step #2: Buying a Home in Denver, CO.
Step #3: Buying a Home in Denver, CO.
Step 3: Choosing Your Lender
As discussed in “Preparing for Home Ownership”, it is important to complete your loan application early in the buying process so the lender can determine the price, terms, and rates for which you qualify and issue a pre-approval letter. Your lender is also required by Federal Law to provide a “Good Faith Estimate” following the application process.
It is imperative that you choose your lender with care. This is the person you will trust with handling the funding of your home loan-perhaps one of the biggest investments of your life. Please make sure he/she is ethical, conscientious, trustworthy and responsive.
Handling Loan Deadlines
Here’s the biggest reason we urge you to use a reputable lender: While the lender is not part of the Contract if he/she fails to complete requirements by the loan conditions deadline, you can lose your entire earnest money deposit. In Colorado, the Contract is not conditional on the loan actually funding.
Also, the Colorado Real Estate Commission’s “Contract to Buy and Sell Real Estate” Loan Conditions Deadline states, “Contract is conditional upon Buyer determining, in Buyer’s subjective discretion, that the availability, terms, conditions, and cost of such New Loan are satisfactory to the Buyer.” If you (the Buyer) aren’t satisfied with the loan by this deadline, you can walk away from the contract and recover your earnest money deposit as long as you deliver written notice by the deadline. Of course, I will be in constant communication with you and your lender to make sure this deadline is met.
Stay Close to Home
Pick a licensed lender who is physically located and does business in the Denver Metro-area. This ensures that he/she is familiar with Denver real estate customs and the Colorado Contract to “Buy and Sell Real Estate”....
Home Ownership - You Have to Start Somewhere…
Determine what you can afford. Ballpark: You can generally afford a home equal in value to between 2-3 times your gross income. Your lender can provide details pertaining to your specific situation.
Save for the down payment. Ideally, save 20% of the purchase price to use as your down payment. Additionally, closing costs (i.e., taxes, transfer fees, lender fees, etc.) can average 2-3% of the home purchase price.
Check your credit. Review your credit reports from the three major credit bureaus (Experian, Equifax, and TransUnion) to ensure they are factually correct. Immediately make any necessary corrections before meeting with your lender or mortgage broker. You may visit Web sites such as www.annualcreditreport.com to check your credit scores. Keep in mind that your credit score or “FICO score” determines your creditworthiness and the eventual interest rate on your loan.
Investigate mortgage programs. There are many different loan programs that include options such as 30-year, 20-year or 15-year fixed mortgages; adjustable rate mortgages (ARMs); and government-backed loans such as FHA (www.fha.gov) or VA loans (www.va.gov). FHA loans are insured by the government, require certain minimum standards as defined by the FHA, and typically allow for lower down payments (3-5% of the home price) than conventional loan programs. Spend time thinking about which program makes the most sense for your personality, financial goals, and current financial status.
Get pre-approved and a pre-approval letter in writing. Expect to provide your lender with documents such as (but not limited to):
Pay stub copies
Bank/credit union account numbers and statements for preceding months
Credit card statements with outstanding balances
Previous addresses for seven years
Copies of brokerage accounts and retirement accounts
Step #1: An Overview of the Buying Process
Buying a home, especially if you are relocating from outside of Denver, is an exciting yet sometimes overwhelming process. The information on this site is intended to ease this process through a “one-stop” shopping experience. The Denver neighborhood profiles, combined with the customized neighborhood search features, give you an idea of the “flavor” of the neighborhood as well as the price point in that area.
The additional content in this section, while neither exciting nor exhaustive, will acquaint you with the home buying process in Denver. Furthermore, as your exclusive buyer’s agent**, this is what you can expect from working with an agent from Sage + Sparrow Real Estate.
- Assist you in finding a home from MLS that meets your needs
- Schedule, preview, and show these homes
- Provide a list of ethical, reliable and competitive lenders so you can get pre-qualified
- Conduct a competitive market analysis of your favorite homes to determine value
- Construct an advantageous offer with your full input
- Advocating on your behalf while presenting your offer
- Continue follow-up and negotiate terms with the listing broker
- Meet you at the inspection
- Explain the Colorado real estate contracts and implications
- Constant communication and coordination with all vendors or agents
- Provide you with a list of reliable home vendors
- Watch and inform you of dates and deadlines
- Review title and closing documents and attend closing to address any last minute issues
** Colorado real estate agents can represent buyer’s as either a “Buyer’s Agent/Broker” or as a “Transaction Broker”. In a nutshell, a Buyer’s Agent has a fiduciary responsibility to advocate on behalf of the Buyer whereas a Transaction Broker simply communicates information between parties....
Most people move to Denver or the surrounding suburbs because of the outdoor recreational opportunities with the actual home preference as an afterthought. While there are too many parks, hikes or trails to describe in one blog post here is a sampling of metro Denver neighborhoods that are within a short distance to some fabulous parks.
This is just a sampling of metro Denver neighborhoods close to outdoor recreational parks. There really is a neighborhood for every interest throughout the Front Range. Call us at 303-489-4035 to find out what area works best for you.
Before you begin to shop for a new Denver home, you should set up a time to meet with a lender to figure out how much you can afford. This will put you in a better position as a Denver home buyer. That's when it's important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.
To get pre-qualified for a loan, your lender will collect information about your debt, income, and assets. They'll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. Next, he or she will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.
It's important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you the competitive advantage when the time comes to bid on a Denver metro home because you have been approved for a loan for a specified amount.
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the...
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage rates are increasing....