Buying in Colorado this year? Time to get ready.
Typically, more buyers are out and about buying homes in Longmont during the spring market than at any other time of the year. The spring market in Northern Colorado starts as early as February, and continues through June. In this article, I’ll walk through some of the key steps that I help my clients work through as they prepare to buy a home. This is part of what I do to protect my client’s interests before, during, and after their home purchase.
Being prepared can put you in a position to be the “early bird” buyer who gets the right worm….I mean…home! See, I liken home shopping to worm hunting. My daughter loves worms more than people love browsing Zillow. Beginning in March, she keeps her worm-hunting supplies at the ready by the back door. Though a storm (or in your case, a house) may not come along on a given day, she is ready to act during the short windows when worms are available. She’s not scrambling when the opportunity presents itself.
Similarly, if you are buying this year, it is important to be prepared before you start scheduling time for home tours. Your right-fit home may not be listed for sale soon, and you may choose to not make an offer even if it does, but you’ll certainly find yourself at a disadvantage if you are not prepared to act when the opportunity arises.
And even if you don’t proceed with home purchase, reviewing your finances and budget annually is always a great idea!
Here’s how to get started…
Get Your Finances and Budget In Order
- Completely analyze your finances and collect any necessary documents. Your lender will need to look over your income information, bank statements, proof of current income, copies of tax returns, and brokerage account statements.
- Avoid making purchases or changes to your finances that would degrade your credit score. Postpone making any big purchases that would require a loan (like a car purchase), and don’t accumulate a mountain of credit card debt.
- Go through your budget to determine what you can pay (and feel comfortable paying) per month toward your new home. Focus more on your monthly budget and what housing expenses are comfortable for you. That context will be important as you move to the next step: loan pre-approval.
Get Pre-Approved for a Loan
It is very important to get pre-approved for a loan BEFORE you get too far along in your home search. (This is not a typo. You need to be pre-APPROVED for a loan, not just pre-qualified). Pre-approval typically requires a lender to verify your income and finances more stringently than they would for pre-qualification.
Pre-approval is especially important in Colorado’s spring market as buyers are out in force. That means you are more likely to be in competition with other buyers for a desirable home. Even if you are not competing with other buyers, pre-approval is still necessary. Sellers will often weigh whether a potential buyer is pre-approved for a loan because they know that it’s a sign that a buyer is serious and more likely to be committed to completing a purchase.
Getting pre-approved is often free, and even if you do have to pay an initial processing fee, often those fees can be credited back to you at closing. It’s one of the most important steps in getting prepared for Colorado’s spring market!
To get this done, meet with a mortgage lender who can get you up to speed on different loan products and their requirements (including any credit score and down payment requirements). A mortgage lender can also give you an overview of current interest rates and their future outlook.
The better your overall financial position is, the better your loan terms will be… it’s that simple. However, many people can get approved for more than they want to spend every month, so be sure to understand the relationship between a comfortable monthly payment and the overall purchase price. In other words, tell your lender that you are interested in understanding what price range corresponds to the monthly payments you feel comfortable with.
If you’d like a recommendation for a few local mortgage brokers who have a track record of meeting their clients needs, I’m happy to offer suggestions. Your mortgage broker plays a significant role in the process of buying a home. I have seen home buyers go through so much unnecessary stress as a result of their lender dropping the ball or leaving them confused about the costs of their loan. (NOTE: I am not given kickbacks for referring you to any lender, ever. I want you to be successful, and will only recommend professionals that I trust to provide you with the best service.)
Take Time to Explore and Understand What’s Most Important to You
This next part of the process can sound trivial, especially if you’ve seen anything from HGTV in the last twenty years, but bear with me….
Do you need a certain number of bedrooms and bathrooms? Probably!
Do you have a hobby or home-based business that requires space? Okay, better account for that.
Do you want a luxurious en-suite primary bath with jetted tub, steam shower, and self-cleaning toilet? I’m right there with you!
Don’t get me wrong, it is worthwhile to write down your essential requirements for a home (and a few nice features you’d love to have). But it’s REALLY important to remember that real life and “realty TV” are only loosely related. In order to feel confident and grounded as you go through the home buying journey, you’ll want to dig deeper. Here’s what I recommend:
Take stock of what you need to feel “at home” in a space
The answer to this is usually unique to each person, so if there are multiple people in your household, then this step applies to everyone. The needs that your household has for feeling “at home” make the difference between find what I call a right-fit home and what most of the real estate industry just calls a dream home. I explain more about this consideration in my article on a sensory-friendly approach that benefits anyone looking for their next home.
Consider your priorities beyond homeownership.
I am a big believer in approaching home ownership from the perspective of how a home can help you live the life that you want. The corollary to this is that a home can also tie you down and limit your ability to achieve your goals. It’s about finding a right-fit home, not necessarily a home that’s on-trend. Much like taking stock of what you need to feel at home, the answer here will be unique to you. I don’t dictate this for my clients, but I work with them to help them keep their broader goals in mind and not get swept up in the emotions of the home search.
Here’s a quick examples of how my clients have used this perspective to their benefit. A few years ago I had a client who was buying his first home. He had one vehicle, a big pickup truck, and a stable job in town. He approached the process assuming that he would buy a home in an outlying small town where he could be free to work on his truck at home, since that was a priority for him. As we worked through the process of figuring out how homeownership fit with his overall goals, I shared a couple of insights that helped him gain confidence. First, I considered his beloved truck and the daily commute he would have if buying a home far from his job. When I showed him my calculations for the annual fuel costs (and total time spend commuting) he realized that it might make more sense to look for homes in town. The other thing that I helped him understand was that there really were neighborhoods in town where homes had space for him to work on his truck that would also be within his price range. These observations weren’t meant to change his mind. They helped him think about his home search in a different way that ultimately saved him quite a bit of money and time.
Get to know the neighborhoods
Visit neighborhoods that you think would align with your needs. Don’t just drive through them; make a point to go there for your normal activities such as coffee with friends or grocery shopping. Try some local restaurants and see what it’s like there at night. Take your kids to the different playgrounds or go on a walk through the neighborhood to see what stands out to you. If I’m helping you as your agent, I can also give you guidance on other comparable neighborhoods.
It’s the Final Countdown
I hope this article leaves you more confident about what you can do to make your next move a success. It’s important to go through some self-reflection to make sure that moving forward on a home is right for you at this time.
Is your lifestyle ready for homeownership? Do you plan to be in the area for at least another five years? Is your job stable and income consistent? Do you plan to marry or have children soon that may affect where you live?
It doesn’t hurt to put some effort into the process and then realize that you might need to wait another year or so before you are comfortable or ready to put down roots. This is your life, and your home, and it needs to happen on your schedule.
When You’re Ready!
If you want to help with the preparation, feel free to reach out and schedule a consultation with me. I often meet with people who are just beginning to think about their next move. You don’t have to commit to working with me on a home purchase. It’s never too early to start the planning process, and I’m ready when you are. Click here to find a time that works for you!
