5 Tips for First-Time Homebuyers

Let’s face it, buying a property can be a daunting task even for a seasoned real estate investor, let alone someone who has never purchased a home. The average millennial will spend an average of $97,000 on rent before they even consider making the change to homeownership. As a Realtor, this statistic hurts me. In the Denver area, we have seen an increase in rent for the last 15 years and this trend does not seem to be slowing. On the other hand, interest rates are near an all time low (Sub 4%). With high rent prices competing with low mortgage payments, Denver is seeing an influx of first-time homebuyers and for good reason: when owning is cheaper than renting, it is hard to ignore.

If you decide to forego your lease and start your journey to homeownership, here are 5 tips!

1: Start Saving for a Down Payment

Pick a percentage of your monthly income to put towards a down payment and stick with it! There are plenty of ways to do this, but what I have found to be the best method is automating a deduction from your bank. It is easy to do and it is easy to forget, which makes saving painless. Keep in mind that putting aside money will not only help you get approved for a higher loan, but it will also lower your monthly mortgage payments.

2: Meet With Your Realtor

First time homebuyers oftentimes feel as though they are “wasting” a Realtor’s time because they are not immediately ready to buy a home or they simply do not know any of the steps of the home-buying process. This notion of “wasting” a Realtor’s time should be forgotten. No matter how simple it may seem, it is our job to help with ANY questions you may have. This does not have to be a formal meeting. Your Realtor will be able to establish a tailored game-plan for your real estate goals.

3: Shop Around for the Right Lender

There are plenty of companies with many different lending packages. If you have no idea where to start, your Realtor should be able give you a list of lenders that will fit your personality and financial goals. One thing to keep in mind: be open with all lenders you meet before finding the right lender for you. You can oftentimes leverage the lending companies to match whatever offer you found most attractive with the company that you liked best (think of it as a price-match guarantee).

For example: You meet Lisa at “123 Home Mortgage” and, after your meeting, you decide Lisa would be a great fit. Lisa at 123 Home Mortgage is offering an interest rate of 4.3%. You then meet Cody at “ABC Home Mortgage” and he is offering to pay for the home inspection and give you a interest rate of 3.9%, but you don’t think he would be a good fit for you. Simply call Lisa and ask if she can meet the terms that were offered at ABC Home Morgage. Usually, lenders will be able to make it work.

4: Research The Market

There are plenty of ways to research the real estate market. The Multiple Listings Service or the MLS is the best place to find the most up-to-date information. Your Realtor will be able to give you access to this portal and can help refine the search to your real estate needs. Think of the MLS as a super-Zillow. If you don’t have access to the MLS, don’t worry. Start researching homes via any of the internet real estate websites. The more research a homebuyer does independently, the more confidence you’ll have to identify a good buy.

5: Have a Firm Understanding of the Closing Process

The closing process starts as soon as your offer is accepted on a property. This process takes, on average, 30 days and includes many dates and deadlines to ensure that the home that think you’re buying is EXACTLY what you’re buying. The best way to familiarize yourself with what takes place in a 30-day closing is to ask your Realtor to meet and provide information about what to expect during the closing process. Your Realtor will be able to provide important dates, deadlines, and responsibilities. The closing process is truly where your realtor does their job. They ensure that all dates are being met, all financing is moving forward, and everything is moving smoothly towards the closing date, and homeownership!