Are you thinking now might be the time to step out and explore the possibility of buying your first home. Congratulations! You will seldom find a real estate market like we are experiencing in Colorado Springs and you will definitely benefit from the very low interest rates that are available right now.

Before you start to look for a home, be sure that you won’t be considering moving from that home for at least 3-5 years. You might be scratching your head right now but you need to realize that it takes about 3-5 years to build up enough equity to recoup your original investment costs in a normal economy. You probably have read or heard that real estate prices in our area have dropped anywhere from 14-17% since June 2007 and that interest rates are at historically low levels. These indicators mean this is a perfect time to buy an affordable home.

And now, 10 tips that will make buying your first home a pleasurable experience and one that you will want to repeat.

1. It is important to use the services of an experienced real estate broker when you make the decision to purchase your first home. Often, if you ask around you will find that your friends or family members can recommend a real estate broker that is both reputable and knowledgeable about the local real estate market. You need to feel comfortable that your Broker will be your advocate and explain every step of the buying process to you with patience and understanding. Talk to a reputable lender. 

2. After choosing your Realtor, the next most important step is to choose a lender that is reputable and reliable.  You might be tempted to use an internet lender because they often offer unbelievable rates and yes, the deals and rates are unbelievable. Ask your Realtor for a recommendation of 2-3 lenders. Make an appointment to meet with each of the lenders face to face. Let them know that you are a first time buyer and want to know what loan programs are available for first time buyers. The lender will ask you questions about your job history, how much money you have to put down, what you have as debts, and what you have as assets. A reputable lender will spend the time you need to explain the different loans available and explain the cost of purchasing a home.

3. Once you have decided on a lender, you will want the lender to check your credit and credit score. Lenders determine your interest rate and how much you qualify to borrow (your debt to income ratio) as they review your credit report. A FICO credit score of 720 or higher will help you obtain the lower interest rates. The FICO credit score is determined by how much credit you have and if you pay your monthly obligations on time.

4. The lender will tell you how much loan you can qualify for and then you need to take the time and make a budget to determine how much you can spend for housing. The lender may tell you a payment amount that is higher than you want to spend. If you have a budget you won’t be swayed to spend more for housing than what you can realistically afford. Get in the habit to save money. 

5. Once you know what you want to spend for your monthly mortgage payment, start saving the difference between what you are paying for rent and what your monthly mortgage payment will be. In may only be a few months before you close on a new home but in just those few months you will have initiated a habit of saving that will benefit you for the rest of your life. 

6. Decide what is important to you.  Your Realtor should sit down with you and determine what features are most important to you before going out to look for homes.  Surveys indicate that besides the number of bedrooms and baths, location is an important factor for most buyers.  You might want to be close to work or have your new home located in a certain school district.  Whatever those features are, you need to decide on what is important to you and prioritize these features in a list.  This will be helpful as you begin to look at homes.

7. Eureka! You have found your dream home!  Now don’t lose it by making a ridiculously low offer.   Since mid 2007, Colorado Springs has been experiencing a definite Buyer’s market.  That means buyers have the upper hand when it comes to negotiating offers on homes in our local real estate market.   Buyers can often offer less than the asking price and ask for some if not all of their closing costs to be paid by the seller.  That doesn’t mean that you should make a ridiculous offer and expect that the seller will accept it.  Remember, sellers have seen their values decrease steadily since mid 2007 and in some cases; the sellers are selling for less than what they paid for the home originally.

8. Buying a home is usually the most expensive purchase you will make.  Be prudent and spend a little bit of money to hire a professional home inspector to inspect the home.  A home inspector will look for safety hazards, items needing immediate repair, and will explain how to maintain the home once you own it.  A home inspection gives you the opportunity to acquaint yourself with the property you are buying.  If inspection uncovers serious problems you can most often opt out of the purchase rather than being saddled with a ‘money pit’.

9. Review the title insurance commitment.  Title insurance provides insurance coverage if a claim is made on the title.  It is important to review your title commitment to make sure that your names are spelled correctly, the legal description is accurate and the loan information is correct.  You should review the requirements and the exceptions of the title commitment to make sure that there are no surprises.   You should also review any covenants that go with the property at the time you are reviewing the title insurance commitment to make sure you can abide by them.  There is nothing worse than finding out after you close on a home that the covenants won’t allow the business you run from your home. 

10. Walk through the home before closing.  Be sure to arrange for a walk through of the home you are buying before attending the closing to verify that the home is substantially in the same condition as when you made your offer to purchase.  We recommend to our clients to schedule the walk through 24-48 hours prior to closing.  It is best to have the home totally empty so you can view all the surfaces of the interior without interference. The seller is supposed to leave the home in a clean, ready to occupy condition with all repairs from the inspection resolution completed.  If any problems surface at the walk through, your Broker should contact the Seller’s Broker to work out a resolution before closing.