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Buying your first home

Now is a great time to buy a home in the GunnisonValley.  There are a lot of deals to be had, but you need to be ready to act quickly when something you like comes along.

 

I suggest you do two things before you start looking at homes and/or condos.  First, find a Realtor who you trust and like to work with.  Any Realtor can show you and sell you any property in the State of Colorado.  In most cases people work in a certain area and it makes sense to work with someone local.  Anyone in Gunnison or Crested Butte will know about properties in both areas although a few agents will only work on one end of the valley or the other.  It is a good idea to work with only one agent so they can keep an eye on the market for you and let you know when something you like comes along.  Realtor’s are only paid when they successfully sell you something so it is nice to work with only one person.

 

The second thing is to speak with someone about financing.  It can be difficult to get a loan these days and it is good to know what your options before you start looking.  There are things you can do to improve your chances of getting a loan and mortgage brokers can help you move in the right direction.  Although traditional loans require 20% of the purchase price as a down payment, there are still programs that get you in a home for as little as 3.5% so that can make a big different in how long it will take you to get started.  Your Realtor can recommend a few good people to get you started on this.

 

At this point you probably have an idea of where you would like to live and ideally what kinds of things this home would have.  Number of bedrooms, garage or not, etc. are examples of things that are helpful to know.  It is also good to let a Realtor know things like if you have a dog and would need a place for them to run around safely (i.e. – a fenced yard) or if you are not handy and don’t want anything that needs to be fixed up.  These are just examples and I’m sure you can think of things in your own situation that would be helpful to someone.  However, while it is good to have an idea of what you are looking for, don’t be afraid to look outside those perimeters.  Once you have looked at a few things, a good Realtor will be help to help guide you to things you may not have considered previously.

 

Once you find the property that you like and can afford, you and your Realtor will put together an offer to buy it.  This will include information about how much you will put down, how much money will come from a loan, who exactly is buying the property, additional information you would like to see before purchasing it and how much you are willing to pay for it.  In most cases you will not offer what they are asking for it and your Realtor can help guide you to determine what to offer.  In some cases the seller will accept your offer, but often they will give you a counteroffer.  This can either counter price or some of the other terms you have put forward in your original offer.  When you submit your offer you will need to give them “Earnest Money”.  This amount of money goes towards the total down payment amount and is to show the sellers that you are truly planning to purchase the property.  This amount should be as high as possible, but not so high as to be a burden on you financially.  Again, a Realtor can help guide you on this amount.

 

Once you and the seller agree on a price and terms, your earnest money will be deposited and then you will start the process of purchasing the property.  Generally there will be about 45 days between the time you get the property under contract and the closing of the sale, but you can offer whatever period of time you need or want.  In that time there will be several things to do and several ways that you can get out of the purchase if you find anything that is not satisfactory.

 

  1. You will receive title information which will outline the history of the property and disclose anything regarding easements (someone else has permission to use part of the property), liens (someone who previously owned the property owed money and someone tied that debt to the property) or information on the Homeowners Association.  If there is anything that makes you uncomfortable in this information, you can cancel the purchase.
  2. You will receive a Seller’s Property Disclosure unless it is owned by a bank.  This document is where a seller tells you about the condition of the property to the best of their knowledge.  For example, if there was a leak in the roof 5 years ago and they repaired it, they would tell you that and then you would have the opportunity to check it out further if you wanted to.  Again, if there is anything that makes you uncomfortable here, you can cancel the purchase.
  3. You will pay someone to inspect the property.  The cost of this depends on the size of the property and the inspector, but is around $300 – 700.  They will give you a report of anything that didn’t seem right to them.  Your Realtor can recommend people to do this for you.  Once you get the report you can choose to handle any issues in several ways.  You can ask the seller to repair things, you can ask the seller to give you money to repair things yourself, you can choose to ignore them and handle them later or, if they are a big issue, you can cancel the purchase.
  4. If the property is a single family home you may want to get a survey.  This process would mark the corners of the property so you know what is part of it and what is not.  There are varying degrees of preciseness for surveys so the cost can vary greatly.  If the survey finds anything strange (like the east 10’ of the house is not actually on the property or the neighbors shed is on the property) there are options to try to fix the problems or you can cancel the purchase.
  5. You will be required to apply for a loan by a certain day and there will also be a day by which you will want to have a loan approval.  If you are unable to get a loan that meets your needs (like the payments are going to be too high or they don’t want to give you a loan) then you can cancel the purchase.  The bank will probably require an appraisal of the value to make sure that what you are going to pay for the property is not more than what it is worth.  If the appraisal values it higher than the purchase price then you can get out of the purchase.

 

As you can see, there are a lot of ways that you can get out of the purchase and get your earnest money back in full.  The key is to make sure that everything is done by certain dates and that you are moving forward in good faith.  The sellers cannot get out of the purchase unless you default on a deadline or they choose to give you your earnest money back.  It is very rare that they would want to get out of the contract, but it is important to move forward with things on your end.

 

There are just a couple more things to keep in mind.  Once you have started the loan process do not purchase anything using a loan or credit card because the mortgage broker will look at your credit report early and then they will look at it again just days before closing.  If you suddenly have a new loan for a car or some furniture it may tip the scales the wrong way and make it so you don’t qualify for your mortgage anymore.  Just wait for any big purchases until you have purchased the property!  Banks are also going to want to see two months bank statements & two years tax returns so you should have those ready.  They will want to see that you have the money for the down payment in the bank.  If part of it is a gift, you will want to have it in your account early or you may need a gift letter.  Talk with your mortgage broker about this if part of the down payment is a gift.

 

If you are planning to stay in the GunnisonValley, there hasn’t been a better time to purchase property here in a long time.  I really enjoy helping find the right place to buy and would love to work with you.  Don’t hesitate to contact me with any questions at any time through the process – even if you are several months away from purchasing.  It is always good to know that you are moving in the right direction!