HOW TO BUY A HOME & First-time Homebuyer Tax CreditFirst Time Homebuyer Tax Credit
If you haven't owned a home in three years or have never owned a home, you probably are eligible to receive an extra $8000 in your next income tax check if you place a home under contract prior to 5/1/10 and close by 7/1/10. The credit is equal to 10% of the purchase price, up to $8,000. If you purchased an $80,000 home or higher, you would be eligible for the $8,000 and less than $80,000, you would receive 10% of the purchase price. Condos, townhomes, single family homes, duplexes and coops are eligible as well. Long-time homeowners who buy a replacement home after Nov. 6, 2009 or in early 2010 may also qualify for a $6500 tax credit for married couples. Under this rule, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence. Please call or e-mail us for more information.
Below you will find invaluable tips on buying a home whether you are a seasoned buyer or a first time homebuyer.
Your broker’s primary focus is to help you find a home you love, in the shortest amount of time, for the least amount of money and hassles. They will handle the process from beginning to end so that all you will have to worry about is deciding which home to buy and what is your best financing option. Sandbird Real Estate works with many different lenders to help match your lending needs to the correct loan program.
The real estate broker is paid a commission given by the seller, therefore, there is no charge to the buyer. Time and money is invested by the broker in searching for the best home, therefore, many brokers will request an "Agency Agreement" to be signed (written by the Colorado Real Estate Commission) which will explain how the broker will represent you in your transaction. This agreement does not obligate a client to purchase a home but states how the client and the broker will work together to make homeownership possible. If you see ads on the internet or newspaper or for sale signs, even for sale by owner ads, and you wish to find out more about this home, you may contact the realtor you are working with to gather more information. You do not need to call the number stated in the ad or the sign. That way you are professionally represented in all transactions by your broker, which saves you time and aggravation. The broker should be looking out for your best interest at all times.
Your broker will first try to find out from you in as much detail as possible, all about the type of home you are interested in, what suits your needs, the best location, etc. The first time you go out to look at property will help your broker a great deal in learning about your taste, so be sure to verbalize your likes and dislikes.
What You Can Expect When Contacting A Lender
One of the first things your broker will ask you to do, if not already done, is to find a good lender who will offer you the best terms. If you have your own lender, this is great or if you need any lender recommendations we will be happy to do so. Much of the work with the lender can be handled over the phone. You can be prequalified by a lender over the phone sometimes immediately, and the lender can then give you a letter saying you are able to purchase a home for a certain dollar amount. This is very helpful when you find the home you want because most sellers require this in order to accept an offer on their home. The lender will ask you pertinent questions about your finances, your credit and income, sometimes they will do a brief credit check with your permission, (you may refuse this until you are serious and want a lender letter, but you may give the lender an idea on your credit score instead) and then they will be able to give you a general idea of what price range of a home you should be looking for and what your monthly payments will be. If your credit is less than perfect, don’t worry, the lenders we will refer you to have many programs including those for people with all different kinds of financial situations, even in a tough mortgage market. They work with lenders who have special programs for first time home buyers who can qualify for downpayment assistance, even with flaws and problems with their credit history. They can help you arrange for closing cost assistance as well. You can still buy a home with no money believe it or not. When you are ready to be prequalified, you may want to compare the services and terms of several lenders to get the best deal. There should be no charge to be prequalified over the phone.
One of the first things your broker will ask you to do, if not already done, is to find a good lender who will offer you the best terms. If you have your own lender, this is great or if you need any lender recommendations we will be happy to do so. Much of the work with the lender can be handled over the phone. You can be prequalified by a lender over the phone sometimes immediately, and the lender can then give you a letter saying you are able to purchase a home for a certain dollar amount. This is very helpful when you find the home you want because most sellers require this in order to accept an offer on their home. The lender will ask you pertinent questions about your finances, your credit and income, sometimes they will do a brief credit check with your permission, (you may refuse this until you are serious and want a lender letter, but you may give the lender an idea on your credit score instead) and then they will be able to give you a general idea of what price range of a home you should be looking for and what your monthly payments will be. If your credit is less than perfect, don’t worry, the lenders we will refer you to have many programs including those for people with all different kinds of financial situations, even in a tough mortgage market. They work with lenders who have special programs for first time home buyers who can qualify for downpayment assistance, even with flaws and problems with their credit history. They can help you arrange for closing cost assistance as well. You can still buy a home with no money believe it or not. When you are ready to be prequalified, you may want to compare the services and terms of several lenders to get the best deal. There should be no charge to be prequalified over the phone.
After you have been prequalified, and you have chosen the lender you would like to handle your mortgage, the next step is to be preapproved. Many times this is done when you find a home you want to purchase, but can be done at any point in time and will help speed up the process if done early, even before you find your home. This process will give you an edge when making an offer, over a buyer who is prequalified. Preapprovals mean a lot to a seller, knowing you have gone the extra mile to make homeownership possible, and also saves them precious time. The preapproval process involves filling out a loan application and delivering it by fax, e-mail or in person to the lender, along with bank account numbers, paystubs, W-2's, etc. If you have already put in an offer on a home, some lenders will ask you to pay for the appraisal soon thereafter but most of the time this fee can be rolled into the closing costs. At that point you may want to look into having your lender lock in the interest rate depending on where the financial market is at the time. That way if interest rates rise between the time you make an offer on a home and the time you close on it, you will then get the interest rate originally quoted. However, if it drops, you will not have the advantage of the lower rate. Check with the lender on their policies for locking in interest rates if you are interested. The lender should give you a “Good Faith Estimate” of your closing costs, interest rate, monthly payments, etc. shortly after they receive a copy of your purchase agreement (Your agent will fax it to them). You may also get this once you have decided on a house (before a contract is written) and wish to know all of the costs involved including your payment and interest rate information. If you don’t receive a “Good Faith Estimate,” let your broker know. You won't have to pay for most of the costs involved with purchasing a home until the day of closing.
How Do You Start Looking For A Home?
Most of the homes in the Denver area are listed through the Multiple Listing Service (MLS) and brokers can access this through a special computer program. The MLS charges agents a usage fee based on the amount of minutes on the MLS system. A search will be done on the MLS with the criteria you have given, and it will be narrowed down to the closest matches. These listings can be e-mailed to you directly from the MLS, with lots of detail and photos. If time permits, your broker will preview the homes before showing them to you so that you are not wasting your time looking at homes that do not meet your needs. Before an agent can show you a home or preview it themselves, they will call the listing office to set up an appointment. The listing office in turn calls the sellers to make sure it is okay to show the home (or leaves a message if they are not home). For security reasons, real estate offices do not give lock box codes directly to the agents over the phone at the time they are setting up the showings, but will call their offices with lockbox information. They want to make sure it is a licensed agent before giving out codes. A routing map is then made by the agent. However, this process does take a little while. Many times sellers do not like to show their property very early in the morning (they like to have a chance to make the beds and get it looking nice) or late in the evening as they quite often will leave when they know buyers are coming to make it easier for buyers to tour the home. However, if it is a vacant property, it can be shown at any time, but an appointment is always necessary.
Most of the homes in the Denver area are listed through the Multiple Listing Service (MLS) and brokers can access this through a special computer program. The MLS charges agents a usage fee based on the amount of minutes on the MLS system. A search will be done on the MLS with the criteria you have given, and it will be narrowed down to the closest matches. These listings can be e-mailed to you directly from the MLS, with lots of detail and photos. If time permits, your broker will preview the homes before showing them to you so that you are not wasting your time looking at homes that do not meet your needs. Before an agent can show you a home or preview it themselves, they will call the listing office to set up an appointment. The listing office in turn calls the sellers to make sure it is okay to show the home (or leaves a message if they are not home). For security reasons, real estate offices do not give lock box codes directly to the agents over the phone at the time they are setting up the showings, but will call their offices with lockbox information. They want to make sure it is a licensed agent before giving out codes. A routing map is then made by the agent. However, this process does take a little while. Many times sellers do not like to show their property very early in the morning (they like to have a chance to make the beds and get it looking nice) or late in the evening as they quite often will leave when they know buyers are coming to make it easier for buyers to tour the home. However, if it is a vacant property, it can be shown at any time, but an appointment is always necessary.
What Happens When You Find A Home You Want To Buy?
Once you have found the home you love, an offer will be submitted to the listing broker on the home. This is how that process will take shape: Your broker will prepare the offer with the pertinent information on a purchase agreement (contract) and various forms that go with it, have you sign it, submit it to the agent who has the home listed who will then in turn present it to the sellers. If you have found a home you like very much, it is best to make an offer very quickly, because in the Denver market, at any time with a great market or a flat market, the sellers may have several offers coming in at the same time. Most of the paperwork used to make an offer is standard in Colorado, and is written by the Colorado Real Estate Commission attorneys. All of the real estate offices throughout Colorado use these same contact forms.
Once you have found the home you love, an offer will be submitted to the listing broker on the home. This is how that process will take shape: Your broker will prepare the offer with the pertinent information on a purchase agreement (contract) and various forms that go with it, have you sign it, submit it to the agent who has the home listed who will then in turn present it to the sellers. If you have found a home you like very much, it is best to make an offer very quickly, because in the Denver market, at any time with a great market or a flat market, the sellers may have several offers coming in at the same time. Most of the paperwork used to make an offer is standard in Colorado, and is written by the Colorado Real Estate Commission attorneys. All of the real estate offices throughout Colorado use these same contact forms.
What Happens When You Make An Offer?
You may make an offer for any amount of money, with any stipulations you wish. For example, if you found a great home but couldn’t move into it for two months, you may stipulate this two month possession date on your offer. If you loved the home but the carpet wasn’t in very good condition, you could ask the sellers to give you a carpet allowance, or replace the carpet, etc., etc. At the time of making the offer, your agent will need:
You may make an offer for any amount of money, with any stipulations you wish. For example, if you found a great home but couldn’t move into it for two months, you may stipulate this two month possession date on your offer. If you loved the home but the carpet wasn’t in very good condition, you could ask the sellers to give you a carpet allowance, or replace the carpet, etc., etc. At the time of making the offer, your agent will need:
1. Your names as stated on you drivers license
2. Social Security Numbers
3. Current address
4. Lender letter stating what you are prequalified or preapproved for
5. Earnest Money Check (personal check is usually fine)
6. The date you would like to close on the home and take possession
When an offer is presented to the sellers, it is required to give them earnest money, usually around 1% percent of the purchase price. This is usually required to be in the form of a personal check. The check is usually held by a title company chosen by the listing broker or by the brokerage firm, and is applied toward the downpayment on your loan. It needs to be able to clear the bank right away. (There are allowances for this, however, and talk it over with your realtor if you have a problem.) After the sellers look over the offer, they will respond by either accepting the offer or giving a counter offer. Your agent will, of course, handle all the negotiations for you, but the best situation is for both buyers and sellers to feel they have gained from the negotiations, and then it is a “win, win” situation. The earnest money can be refunded and the purchase agreement terminated if the following occurs and written notice is given by the appropriate deadlines stated in the purchase agreement. There are other reasons besides these, however, these are the most common:
1. You are not approved for a loan and are unable to secure acceptable financing stated in the agreement.
2. During an inspection, the inspector finds something that needs to be repaired, and you can not come to an agreement with the sellers on the repairs that are needed, or adjustments to be made. Sometimes a price adjustment is made by the seller in leiu of repairs.
3. The home does not appraise for the amount you have agreed to pay, and the sellers are not willing to come down to the appraisal price. For example, if the agreed on price is $200,000 and the appraisal comes in at $198,000, then the lender requires that either the buyer come up with another $2000, or the sellers need to lower their price by $2,000. Sometimes a compromise is reached and the buyer and seller divide the cost. A low appraisal is not common, but it does happen on occasion. However, it can work to the advantage of the buyer if the sellers are willing to lower their price to meet the appraised value.
4. You cannot obtain homeowners insurance.
By requiring earnest money, the seller is trying to prevent the buyer from getting buyer's remorse or just changing their mind. As you can imagine, this would be a problem for the seller because they have lost precious time and money by taking the home off the market after a contract had been signed.
What Happens After The Offer Is Made And Accepted?
From the time you put in an offer to the time you are able to close, usually averages about a month, but can be as little as two weeks if rushed through. You will receive titlework arranged by the listing agent on your property within the first few weeks after acceptance of the offer. You should also receive the Homeowners Association By Laws, Convenants and Restrictions with your titlework from the title company. Once titlework is finalized, it will insure you a clear title. During this contract period your broker will make sure all of the deadlines stated in the purchase agreement are met. One of the early deadlines is an inspection on the property. The purpose of an inspection is to find out if there are any major repairs needed on the home. There are always little problems found by inspectors on every home and are to be expected. We usually see an average of six to ten items that need repair on most homes. It is best to address just the largest problems. If you can work it out to be there for the inspection, this will be to your benefit. At that time you can ask the inspector any questions about the home and become more familiar with it. You may use any inspector you wish, or ask your broker for a recommendation; they usually range from $150 to $300 depending on the size of the home and the inspector is paid at the time of inspection. The appraisal is done later in the contract period, and you do not need to be present. You will probably want to contact the utility companies a week or so before the closing date to have them changed over into your name. Also, if you are purchasing a single family detached home, your lender will require you to get a homeowners insurance policy. Just call the major companies and compare rates; sometimes the lender will recommend a particular insurance company. If you are buying a townhome or condo, insurance is not required by the lender if the insurance is paid through the homeowners association fees, (which is usually the case about 99 percent of the time) but you may want to consider getting insurance on the contents. It is a good idea to check your homeowners information that comes with the titlework to see what is covered in case of a fire or natural disaster.
From the time you put in an offer to the time you are able to close, usually averages about a month, but can be as little as two weeks if rushed through. You will receive titlework arranged by the listing agent on your property within the first few weeks after acceptance of the offer. You should also receive the Homeowners Association By Laws, Convenants and Restrictions with your titlework from the title company. Once titlework is finalized, it will insure you a clear title. During this contract period your broker will make sure all of the deadlines stated in the purchase agreement are met. One of the early deadlines is an inspection on the property. The purpose of an inspection is to find out if there are any major repairs needed on the home. There are always little problems found by inspectors on every home and are to be expected. We usually see an average of six to ten items that need repair on most homes. It is best to address just the largest problems. If you can work it out to be there for the inspection, this will be to your benefit. At that time you can ask the inspector any questions about the home and become more familiar with it. You may use any inspector you wish, or ask your broker for a recommendation; they usually range from $150 to $300 depending on the size of the home and the inspector is paid at the time of inspection. The appraisal is done later in the contract period, and you do not need to be present. You will probably want to contact the utility companies a week or so before the closing date to have them changed over into your name. Also, if you are purchasing a single family detached home, your lender will require you to get a homeowners insurance policy. Just call the major companies and compare rates; sometimes the lender will recommend a particular insurance company. If you are buying a townhome or condo, insurance is not required by the lender if the insurance is paid through the homeowners association fees, (which is usually the case about 99 percent of the time) but you may want to consider getting insurance on the contents. It is a good idea to check your homeowners information that comes with the titlework to see what is covered in case of a fire or natural disaster.
The Closing
Your primary responsibility after making an offer is to make sure your funds (if any are required) are available to you in plenty of time for closing. For example, if you are taking money from a 401K account, start this process early to make sure before closing everything is in place. You will eventually be given a time when the closing is scheduled. If you have a preference to the time of day that works best for you, please let your agent know, and they will try to arrange it; however, the time and place of the closing is chosen by the sellers and this cannot always be worked out perfectly. Closings are usually held at the title company office stated on the titlework mailed to you. You will only need two things for closing: a cashiers check (or money order) for the amount needed at closing, and your driver’s license. The amount of money you will need to bring into closing will be told to you by your lender or real estate broker as soon as they know this, however, many times, this information isn't available until the day of closing. The check may be made out to the title company. At closing you will sign a gazillion papers, and will then be given your garage door opener if there is any, and the keys to your home. Yea! It usually takes around an hour. This is a good time to ask the sellers any questions you may have on the home.
Your primary responsibility after making an offer is to make sure your funds (if any are required) are available to you in plenty of time for closing. For example, if you are taking money from a 401K account, start this process early to make sure before closing everything is in place. You will eventually be given a time when the closing is scheduled. If you have a preference to the time of day that works best for you, please let your agent know, and they will try to arrange it; however, the time and place of the closing is chosen by the sellers and this cannot always be worked out perfectly. Closings are usually held at the title company office stated on the titlework mailed to you. You will only need two things for closing: a cashiers check (or money order) for the amount needed at closing, and your driver’s license. The amount of money you will need to bring into closing will be told to you by your lender or real estate broker as soon as they know this, however, many times, this information isn't available until the day of closing. The check may be made out to the title company. At closing you will sign a gazillion papers, and will then be given your garage door opener if there is any, and the keys to your home. Yea! It usually takes around an hour. This is a good time to ask the sellers any questions you may have on the home.
Buyers Remorse
Many times, buyers feel nervous and sometimes scared about the process of buying a home thinking they have made a mistake. This is very natural and is called “buyer’s remorse.” If you feel this, at whatever point in time, don’t take it too seriously and feel you are purchasing the wrong home. Your original instincts on what your needs and wants were at the time you made the decision to buy the home, are usually good ones. Trust your original instincts. However, if you are having considerable problems, talk it over with your real estate broker and maybe they can help to alleviate any problems or fears you may have. It is a big commitment and frightening sometimes, but know we will be there with you every step of the way. The interest on a home loan is tax deductible, and rent, of course, is not. It is usually a wise investment if you are not overpaying or financing a home for more than its value. Also, it is good to expect this process will not run perfectly smoothly. There are approximately 14 people working together in the sale of a home, and it is only to be expected when you have that many people, with that much paperwork, there can be a few problems along the way.
Many times, buyers feel nervous and sometimes scared about the process of buying a home thinking they have made a mistake. This is very natural and is called “buyer’s remorse.” If you feel this, at whatever point in time, don’t take it too seriously and feel you are purchasing the wrong home. Your original instincts on what your needs and wants were at the time you made the decision to buy the home, are usually good ones. Trust your original instincts. However, if you are having considerable problems, talk it over with your real estate broker and maybe they can help to alleviate any problems or fears you may have. It is a big commitment and frightening sometimes, but know we will be there with you every step of the way. The interest on a home loan is tax deductible, and rent, of course, is not. It is usually a wise investment if you are not overpaying or financing a home for more than its value. Also, it is good to expect this process will not run perfectly smoothly. There are approximately 14 people working together in the sale of a home, and it is only to be expected when you have that many people, with that much paperwork, there can be a few problems along the way.
How Your Real Estate Agent Is Paid
Your real estate broker works on a commission paid by the seller at the time of closing. Usually the broker will receive 2.8% of the total price of the home for commission which is then divided with the company the broker works for. All of the expenses involved previous to the closing are paid by the broker, and if the home doesn’t close or a home isn’t sold, then the agent doesn’t get paid, however, we never charge the buyer a fee.
THIS IS ALL “YOU” NEED TO DO
(We Will Guide You All Along The Way & Make Sure Schedules Are Met)
1. Find A Lender And Obtain Financing
2. FIND A GREAT HOME
3. Write A Check For Earnest Money When An Offer Is Made On A Home
4. Arrange For Any Funds Needed To Close On The Home To Be Transferred To Your Bank Account
5. Go To The Property For The Inspection With Payment For The Inspector (agent will usually be there also)
6. Obtain Homeowners Insurance If A Single Family Home (not usually required for a condo/townhouse)
7. Change Utilities Into Your Name
8. Show Up For Closing With Drivers License and Cashiers Check (or Money Order) if applicable.
(We Will Guide You All Along The Way & Make Sure Schedules Are Met)
1. Find A Lender And Obtain Financing
2. FIND A GREAT HOME
3. Write A Check For Earnest Money When An Offer Is Made On A Home
4. Arrange For Any Funds Needed To Close On The Home To Be Transferred To Your Bank Account
5. Go To The Property For The Inspection With Payment For The Inspector (agent will usually be there also)
6. Obtain Homeowners Insurance If A Single Family Home (not usually required for a condo/townhouse)
7. Change Utilities Into Your Name
8. Show Up For Closing With Drivers License and Cashiers Check (or Money Order) if applicable.
If you have any questions or concerns, feel free to contact us at any time and
HAPPY HOUSE HUNTING. :-)


