At some point in all of our lives, we will assume the role of first-time homebuyer. What on earth does this entail? Uncertainty, choices, time, stress, this giant amount of money called a mortgage and a place that is truly yours. I often get asked about what first-time homebuyers need to focus on, so here is my top 5:
1. Take Your Time. Take your time looking at properties. When physically visiting the property, notice the direction the front of the house faces (north in Colorado = icy driveways), pay attention to the foundation and look for stress fractures in the ceiling and around windows. Any major issues will come to light during the inspection, but you may be able to cross a property off of your list by doing your own analysis. Also, make sure that you exhaust all of the properties that fall in your price range. I always advise clients to look at as many properties as they can handle so that they can make the best choice possible. Properties are always coming on and off of the market, so it is inevitable that you won’t be able to see them all. Make sure that you see enough to feel comfortable with your final choice. See what’s available in Denver.
2. Talk With a Lender… Yesterday. Just as important as exhausting your choices for properties, is speaking with lenders. They will all be able to offer different rates and different programs specific to their companies. Some are mortgage officers lending their own institutions money and others are mortgage brokers that will shop the loan on a secondary market. There is no right answer here, just a level of comfort. Ask about what types of government programs (FHA, VA, etc.) are available to you. And if it doesn’t make sense, ASK! I promise, you won’t sound dumb for doing so. You have to find a lender and program that make you feel comfortable.
3. Think About Your Exit Strategy. I know, you haven’t even purchased a property yet, and here I am telling you to think about how you are going to get out of it. If you don’t though, you will pay the price later. How long are you planning on living in property? Will you be transferred in the next two years? Do you have pets? Getting married? Children? You’ll have to answer these questions sooner or later, and the more time you give yourself, the easier it will be to come to solution you are content with. Maybe you want to hold onto the property after you purchase another, and use the first as an income property (you can thank me later for this advice)? Regardless of the decision, come up with a plan now, and then tweak it later.