BUYING YOUR FIRST HOME IN COLORADO SPRINGS

For many, buying their first home is one of the most exciting moments in life. To make it as satisfying and rewarding as you'd expect, it's important to make sure that you're financially and mentally ready for the responsibilities that come along with home ownership.

the basics of buying a home in colorado springs

FIRST-TIME HOMEBUYER'S GUIDE

Some first-time buyers will come to us with this idea in their head that owning a home is like renting, but you can paint the walls, have a man-cave, and adopt a furry, four-legged friend. While these are absolutely some of the biggest perks of owning your own space, there are also a wealth of other responsibilities, like a mortgage, utility bills, property taxes, and home maintenance. We want to make sure that your home isn't just a 'for now' home, it's a home for keeps. Preparing for home ownership is the most important first step you can take on the path to buying your first home. Our handy guide will walk you through everything that you need to know about the homebuying process, and what you can anticipate as first-time homebuyers.

It's important to ask yourself the following questions before you start seriously searching for your first home. Answering all of the following will help you decide if you truly are ready for the responsibilities, requirements, and rewards of being a homeowner. Without further ado, here’s everything you need to know about buying your first home in Vancouver, BC (and a few tips and tricks as well)!

1. How Much House Can You Afford?

Nothing is more upsetting for a home buyer than finding out they can't afford what they thought they could. Some will even try to justify allocating more money to their mortgage each month to be able to afford a more expensive home, but sacrificing a huge portion of your income just to pay for your massive mortgage will soon make the home a drain on your resources rather than something that you can be proud to own. As a real estate team that cares about your prosperity, it's important to us that your expectations are realistic and sustainable. Once you figure out how much you can afford, we'll help you find a home that matches your preferences and budget.

Part of determining how much you can borrow comes down to your debt-to-income ratio. This, in addition to your credit history, is one of the biggest factors that lenders take into consideration when determining how much you can borrow. Between credit cards, car loans, and a mortgage, your overall debt should never account for 40% of your income. Your housing should not accumulate for more than 32%, which would leave 8% for other debts.

how much house can you afford

2. Determine What Kind Of Home You Want And Start Looking

Depending on the kind of home and the location that you want, that 32% could go a little or a long way. Do you want a new home, or something that's easy to fix up? How do you feel about mowing the lawn and cleaning the gutters? Would you rather pay someone else to take care of the minor maintenance? Would obeying rules about the number of cars you can park outside and trash cans you can have bother you? The answers to these questions and others can help you determine what type of home you really want, even if you don't know it yet. Military homebuyers can take advantage of special government loans to help make their dreams of home ownership become a reality. Learn more about VA loans and mortgages.

what kind of house do you want

Tip: It's important to keep your priorities in check when touring potential homes. The idea of owning a home can overcome your practical mindset, so to keep your emotions in check, it's a great idea to bring a list of your priorities with you to help steer you on track. Know what you want and need in a home so that you can judge if that home really is or isn't right for you.

3. Hire A Real Estate Agent

You have advantageous goals, and we have the knowledge, experience, education, and local know-how to make those goals a reality. You need to find a real estate agent that you trust to have your best interests at heart and the confidence to negotiate on your behalf. When you hire the Military Home Search team to represent you as a buyer, we're going to want to know how much you can afford and what's important to you.

4. Found The Perfect Home? Place An Offer!

You have advantageous goals, and we have the knowledge, experience, education, and local know-how to make those goals a reality. You need to find a real estate agent that you trust to have your best interests at heart and the confidence to negotiate on your behalf. When you hire the Military Home Search team to represent you as a buyer, we're going to want to know how much you can afford and what's important to you.

5. Schedule A Home Inspection

This is especially important if you're buying a previously loved home. A professional home inspector knows just where to look for pesky mold, mildew, faulty wiring, asbestos, and other harmful or damaged elements. If you opt to not have a home inspection done, you could be putting yourself at risk of paying to fix the problem yourself.

6. Give The Home A Final Walkthrough

Your MilitaryHomeSearch.com real estate agent will be happy to join you through the final walkthrough before closing the deal. We'll make sure that everything that all work that was agreed upon has been completed, and that the home is, in fact, ready for you to move in.

read these before you start looking

Frequently Asked Questions by First-Time Homebuyers

What is escrow and earnest money?

Earnest money is a form of deposit that’s paid to the seller after they accept your offer and the contract is signed. It’s also commonly referred to as a good faith deposit, which is not to be confused with the down payment.

Escrow is a third-party individual or company who’s brought into a transaction to ensure everything is fair for both parties. Things like earnest money are paid to the escrow and held in a special account while the terms and conditions of the agreement are met.

Do I need a home inspection?

Not necessarily, but it’s strongly recommended. A home inspection is the only way to identify any outstanding issues with the home prior to finalizing the transaction. If there any issues arise after you’ve bought the home that were likely pre-existing, like a leaky roof or rotting foundation, you’ll be responsible for the fix. Although a home inspection is an extra expense during the purchase process, it can save you thousands of dollars in the long-run.

For those utilizing the benefits of a VA loan, you don’t need to have a home inspection done, but you do need to have it professionally appraised. The VA appraisal assesses the property for its value and doesn’t get into the details of specifics of the internal systems and overall condition of the home.

Do I need home insurance?

Not necessarily. Unlike auto insurance, home insurance is not mandatory. That being said, it’s the only way to protect your biggest investment from unforeseeable issues, such as a flood. If you’re using a VA loan to buy your home, then your lender will require you to have at least one year of insurance with minimum coverage. The reason for this being that while you’re paying the mortgage, the property is the considered to be collateral and the lender wants to ensure the asset is as protected as possible.

What is PMI?

PMI, or Private Mortgage Insurance, is essentially insurance for your loan. This is usually required when you’re putting a down payment lower than 20% on a loan, as anything less is considered to make it a higher-risk loan for the lender. The PMI is paid in addition to your mortgage payment each month and you’ll stop paying it once you’ve accumulated enough equity that you’re no longer considered high-risk. Because one of the benefits of a VA loan is that you’re not required to put any money down, you will have to have private mortgage insurance for the first few years until you’ve built up enough equity that it’s no longer needed.

How do I choose the right lender?

When it comes to choosing a lender, there’s no one-size-fits-all answer to what’s best. Ultimately, you have to choose between going to the bank or going through a broker. Each offer different types of loans, so it’s really important to shop around to find out which best suits your finances and lifestyle. For those using a VA loan, things are a little bit simpler. You don’t need to shop around for the right loan, but you do still need to find a lender who specializes in VA loans.

Do I need a Realtor?

The simple answer is no, you can buy a home on your own without the help of a realtor, but it’s much harder and more stressful. Real estate agents are trained professionals who have invested time and money into becoming certified and know the intricacies of the Colorado Springs real estate market. Your agent will meet with you to learn more about what you’re looking for and help you find the right home. Then, they’ll recommend a fair offer, negotiate with the seller, and work with all other involved parties on your behalf. They’re your best advocate and asset when buying real estate. Even if you’re buying a new construction home, it’s still a good idea to enlist the help of a professional agent to help you through the process.

Here are some additional resources:

How much do I need for a down payment?

How much you need for a down payment will likely largely depend on your credit history. To get the best home loan, you’ll want to have saved up at least 20% of the purchase price, but it’s not always mandatory. Many first-time homebuyers don’t have that kind of savings, but they may be able to afford anywhere between 5% and 10%. This is where the PMI would come into play. If you’re a veteran or active duty military, you could qualify for a VA loan which would require no money down on a home at all. Here are some great benefits of using a VA loan.

Should I buy or rent?

There’s really no concrete answer for this one. Ultimately, it comes down to your finances and lifestyle. If you’re going to be living in The Springs for a set amount of time, then buying instead of renting could certainly be worthwhile.

Here are some additional resources that may help in your decision:

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