Home Buying Process in Denver Colorado
Successful Home Buying Begins with your First Steps
1. Choose An Experienced Buyer’s Agent
2. Discuss and Review Your Needs
3. Loan Pre-Approval
4. Searching for a New Home
5. Choose a Home and Make an Offer
6. Negotiate and Finalize Purchase Agreement
7. Final Loan Approval
8. Home Inspection
9. Review and Approve Settlement Statement
10. Final Walk Through and Closing
Following the home buying process in Denver or other areas of Colorado is important because they are not just home buying tips, they are a step by step process to successfully closing on a home that fits your personal needs. The home buying process begins immediately after you make a decision to buy rather than continue to rent, or even if you may be purchasing your third home. It matters not; as Colorado Flat Fee Realty’s complete 10 step home buying process is what is normally followed nationwide because it is a process that results in the success of your home purchasing goal.
It is particularly important to follow a clear path of purchasing a home in the Greater Denver area because it is currently among the hottest real estate markets in the entire country; with other close by areas of Colorado; like Colorado Springs, Boulder and Ft Collins following fairly close behind. Some homes stay on the market just a few short hours and ultimately sell at or above their asking price due to bidding contest among multiple purchasers, making it imperative that you have the assistance of an experienced buyer’s real estate agent and understand the home buying process in Colorado as well.
It’s quite natural for many buyers to spend several weeks or even months looking for the right home. However, in a flourishing property market like Denver and its surrounding suburbs, things can sometimes move rather quickly. Ensuring you understand the entire process from beginning to end and knowing the most important things to do throughout the process can help make your home buying process in Denver or other areas of Colorado much more enjoyable and successful.
Below, we have listed the complete steps to the home buying process so you may find and close on your perfect home successfully. Not only will you find all the steps needed for a great buying experience, you will also find valuable tips about the most important tasks throughout the buying process and many things you will want to remember to reference later on. Following our home-buying process in Denver and surrounding areas in Colorado begins with choosing one of our great buyer’s real estate agents to partner with. They will walk you through all the requirements of purchasing a home effectively.
Step 1: Choose Your Partner
An Experienced Buyer’s Real Estate Agent
The absolute number one most important step in purchasing a home is the very first step, choosing the right buyer’s real estate agent to partner with. An experienced and savvy buyer’s agent can save you thousands of dollars throughout the property purchase process and will offer you valuable insights on a wide range of topics throughout your search for a home.
A knowledgeable buyer’s agent can help guide you on how much you should pay for a particular home, suggest the best mortgage lenders to work with and offer you the valuable advice you can only get from a real estate professional with extensive experience in your local market. Additionally, Colorado Flat Fee Realty’s buyer’s agents offer special financial incentives; such as buyer cash back programs and down payment assistance you never have to repay to help you with the cost involved in purchasing a home.
If you only follow one of the steps we have included in this list, it should be this one. Partnering with one of our brokers is many times the single most important factor in searching for a new home and successfully completing a purchase.
Step 2: Discuss and Review Your Needs
Once you select one of our premier agents to work with it is important to have an initial meeting to discuss all the details of your personal home buying situation with your agent. Keep in mind, your buyer’s agent will represent you and you alone. You do not want to work with a transaction agent who is working for both the buyer and the seller. A transaction agent has no fiduciary responsibility to either party and as such can disclose everything to the seller and vice versa. Your buyer’s agent’s purpose is to negotiate for you alone always having your best interest in mind and to do everything they can to put you in the best possible negotiating position. They will review with your all disclosures and laws so you have an understanding of the home buying process requirements. Therefore, it’s important to openly discuss all the important aspects of your new home search with your agent including any financial concerns, family needs, the neighborhoods you are considering or any items that you absolutely cannot do without.
The better they understand your overall personal circumstances, the more effective they can be at helping filter through the many homes for sale to find the one that best fits all of your needs and desires to achieve all your objectives and requirements. Obviously, the topics discussed during your initial meeting will vary quite a bit from person to person, depending on your main concerns. However, the key areas below are typically the minimum amount of topics that should be covered during the meeting.
Your lifestyle will determine what type of home might be most suitable for you. Therefore, it is important to let your buyer’s agent know about your work, your family, and your overall lifestyle. Discuss the things in a home that will be the most important to you as well as the least important.
Financial Situation and Challenges
If you have any special requirements, limitations or credit issues now is the time to discuss them with your agent. It is always best to disclose your financial situation and learn about your credit scores. If you are upfront and honest about it, then if any issues arise they can help you find viable solutions. If you choose to hold back information then they may not find out until it is too late for them to offer you help and or save the deal. Remember, your buyer’s agent is on your side and there to help you.
Establish Initial Price Range/Budget
You should always establish a budget in terms of monthly payment and total price before you begin shopping for a new home. Your budget should include the taxes and home owner’s insurance that will be prorated and collected with your monthly mortgage payment and you need to allow for a possible home owners association fee.
Get Recommendations from Your Real Estate Agent Partner
Based on the information you share with your agent they can offer you valuable advice for getting help with a mortgage and getting started in your search for a new home. It is always wise to listen carefully to the advice of your real estate agent as the chances are very good with their 20 -35 years + experience they have seen others in the exact same situation as you and are associated with lenders, home inspectors and title companies.
Step 3: Loan Pre-Approval
Once you complete your initial meeting with your buyer’s agent, it’s time to get pre-qualified for a mortgage. Your real estate agent will have recommendations for which lenders might offer you the best options. Obtaining a mortgage pre-approval or pre-qualification is a crucial step in the home buying process in Denver and all of Colorado.
Having a lender review your financial situation and give you a formal pre-approval letter will let sellers know you are not only willing to purchase their home, you are also able to make a purchase. In fact, some sellers will not even consider an offer unless you have gone through the lender pre-qualification process. It’s important to take care of this step very early on in the process and to keep your agent informed of any communication or extra requirements of the lender.
There are many different types of mortgage programs available and all of them have advantages and drawbacks. The three most common types of mortgage loans are usually classified as FHA, VA or as a conventional mortgage. However, there are some specialty programs available. These are often connected with the classification of your employment or geographically specific related programs.
An FHA mortgage is a federally insured mortgage sponsored by the Federal Housing Administration. If you qualify for this type of mortgage, then the Federal Government insures the lending institution a portion of the mortgage in the event you are not able to fulfill your commitment and repay the loan. This reduces the risk for lenders who are facilitating the loan. An FHA insured mortgage usually requires around a 3% down payment plus closing costs and the maximum loan amount varies from county to county.
A Veterans Administration mortgage is a special program for former members of the U.S. military. Similar to FHA loans there are specific requirements that an applicant must meet in order to qualify for this type of loan. However, in certain circumstances this type of mortgage can offer significant advantages as the loan to value is normally 100%; meaning no down payment is required, yet there will still be some closing cost.
A conventional loan is a mortgage offered through a privately owned or publicly held lender that is not insured or guaranteed by the Federal Government. There are certain cases where this type of mortgage might be preferable to a VA or FHA loan, so do not immediately assume a federally backed mortgage is always the best option. Although conventional loans usually require a much greater down payment.
Other Specialty Mortgage Programs
PATH is a discounted mortgage program that is available to some public employees. If you work for one of the following entities, tell your agent so he/she can guide you to a lender that specifically offers PATH to see if you qualify and if it will offer you any savings.
- Public Employees-Department of Health and Other Local Authorities
- State or Local Public School District Employee
- State University Employee
- Community College Employee
- Employee of the Colorado Public Court System
- Members of PERA (Public Employee Retirement Association)
As stated above all of Colorado Flat Fee Realty’s agents offer special programs to their clients who purchase homes through them. There is the home buyer’s cash back rebate program or down payment assistance up to $19,000. that never has to be repaid. Not all realty companies offer these programs and the additional financial help can easily amount to thousands of dollars which is more than helpful when purchasing a home. The two programs usually cannot be combined as per lender’s regulations.
Step 4: Searching for a New Home
An obvious step in the home buying process in Colorado is the actual home shopping stage. Your agent can analyze comparable property values and help compile a list of properties that fit the parameters discussed ahead of time and schedule a time or multiple times to begin looking at the homes with you. It is important to be open minded as you may come across options you have not spent much time considering.
At first, you might have a tendency to quickly dismiss certain options, only realizing much later, that the home was a perfect fit. You will naturally scale down your options as you begin to get a feel for the area and the homes and pricing available. However, do your best to begin with an open mind and listen to the advice and suggestions of your agent; as he/she is the experienced expert in the area you desire and our brokers are known for their integrity of not just trying to sell you anything in order to procure a quick sale. They have gained a good reputation from many previous happy home buyers because they were more focused on meeting the home buyer’s needs.
Step 5: Choose a Property & Make an Offer
Once you have taken the time to fully review all of your property options and you have discussed things with your agent, it is time to choose a home and make an offer. Most formal offers require a small earnest money deposit showing your good intention to follow through if your offer is accepted, a copy of the pre-approval letter from your lender and an offer in writing, which your agent will prepare and deliver for you. These days things move much faster due to the digital platforms all offers, counters and other negotiations or required documents are handled online on secure websites for everyone’s convenience.
Step 6: Negotiate and Finalize Purchase Agreement
Once you make an offer a number of things can happen. The seller can accept the offer, reject the offer outright or make a counteroffer. Your buyer’s agent will help you properly negotiate the terms in question, as they can include a wide variety of items that range from the selling price of the home to how much of the closing costs the seller may be willing to pay and even if certain repairs will be paid for by the seller.
Once your offer is accepted or final terms are negotiated, then it is time to get prepared to finish the final few steps of the home buying process in Colorado and close on your new home.
Step 7: Consult with Your Lender and Buyer’s Agent on Mortgage Approval
Once an official sales contract is in place, it is best to consult with your lender and your buyer’s agent to find out what is needed to get the mortgage approval finished and ready to close. It is important to note, the pre-approval process at the beginning is only the first half of completing a mortgage approval. Most of the time, the lender will require updated documents, additional information, employment verification and a variety of details to get the loan ready for an actual closing date. It is very important not to take on or even apply for credit elsewhere after your pre approval as this can damage the successful outcome to a final mortgage approval.
Do not delay in supplying the lender with any additional documents or other requirements, as time is of the essence, each item in your contract will usually have a required completion date and often times final underwriting and approval to close can take a bit longer than was originally projected. Every last detail and piece of paperwork must be submitted and the lender’s underwriters will not grant a “cleared to close” until everything has been submitted and reviewed.
Step 8: Order Home Inspection and Review
Once you have talked with your lender and your buyer’s agent about the status of the mortgage approval then it is time to order a home inspection. A home inspection should always be completed and will sometimes prompt a few last minute details to be worked out between the buyer and seller. A home inspection is different from an appraisal. The home inspection is ordered and normally paid for by the buyer to help the buyer know the condition of the home they are purchasing and “what if” any repairs need to be done; whereas the appraisal is now ordered by the lending institution to determine whether the real value of the home is consistent with the loan amount they are lending to purchase it.
Step 9: Buyer Reviews and Approves Settlement Statement
Based on changes in current real estate regulation, a buyer now has to review and approve the Settlement Statement for the closing three days prior to the actual closing date. This is for your protection so there are no surprises at the closing table. Your buyer’s agent will work with to review your settlement statement and explain any items that you may not understand or be totally familiar with.
Step 10: Final Walk Through and Closing
Once you review and approve the Settlement Statement, it is time for the final walk through and to complete the closing. Whether this is your first home or your tenth home, finally getting the closing done is always a great feeling and a very good reason for celebrating!
Contact Colorado Flat Fee Realty, Inc to begin your home buying process in Denver, Boulder, Colorado Springs, or Fort Collins and surrounding areas or call now to speak with one of our brokers whether it is your first home or your next. 303 300 9660