Buying a home in Summit or Park County Colorado is a rewarding and exciting venture. Of course, there are several stressors as well, but overall, most likely you will spend years enjoying your new home. That being said, there are common mistakes that buyers make. Not surprisingly, the majority of buyer mistakes revolve around finances. Understanding what could go wrong and how you can avoid those pitfalls is essential. Partnering with an experienced local agent and mortgage professional is the best way to ensure you’ll have a smooth transaction. Here are some of the most common mistakes we’ve seen buyers make in Summit and Park Counties.
Finance Mistakes to Avoid
Not Getting Preapproved
Preapproval and prequalification are often confused or even used interchangeably by some lenders. The real difference is the steps that the lender takes to verify your creditworthiness. There are many lenders in Summit and Park Counties who can get you prequalified in just a few hours, but preapproval is much more involved and will include an application and credit check.
Preapproval is the most accurate way to confirm how much house you can afford and what your monthly payments will look like. It assures everyone involved in the transaction that you can complete the purchase. It will specify how much money you can borrow and while not required, a preapproval letter is essential to a trouble-free home buying process. Many sellers won’t entertain offers made without a preapproval letter in place!
Making Major Life Changes While Shopping For a Mortgage
Another common mistake that buyers make is making major life changes after they have been preapproved. Most major life changes have an effect on your finances and any changes in your financial situation will impact the loan that you will qualify for. Don’t change jobs, buy a car or make any other large purchases until after you’ve closed on the home. Save yourself the headache of having to go through the entire approval process again.
Buying a House You Can Afford
It’s important to set a realistic budget and stick to it when purchasing a home. Work with a mortgage professional to gain a solid understanding of your debt-to-income ratio. And don’t forget, maintaining a large home can be really expensive. Imagine the heating bill that a 4,000 square foot home could produce during the winter months in Colorado. Is that something you will be comfortable paying for over the long term? Make sure that you are factoring in the costs to maintain your home as well (heating, cooling, repairs, and upkeep).
Not Saving Enough for a Down Payment
Many mortgage companies now have programs that will allow borrowers to put down much less than the traditional 20% to purchase a home. Some programs may even be as low as 5% down. But it’s important to remember that the more you put down the less you will be paying in interest over the lifetime of the loan. It’s important to work with a local mortgage professional who can help you make sense of the numbers and decide what works best for you.
Don’t Forget About Closing Costs and Misc. Expenses
Another common mistake that we see buyers make is not factoring in closing costs and the many miscellaneous expenses that are incurred when purchasing a home. It’s important to remember that, more often than not, the buyer is responsible for paying the earnest money deposit, property insurance, home inspections, moving costs, and mortgage insurance.
Other Considerations
Waiting for “The Perfect Home”
It can be tempting to wait for “the perfect home” to come on the market, but this strategy will only work for a small percentage of homebuyers who can potentially wait years for a home that they deem to be perfect to hit the market. In the meantime, they could have been building equity on a home that they only had to make cosmetic upgrades or changes to.
Understanding The Market And Utilizing Expert Advice
A local real estate agent and mortgage professional will be able to help you set realistic expectations for the home buying process. They’ll understand the trends within the local market and be able to offer expert advice throughout the entire process. If you don’t currently have an agent to work with, it’s a good idea to ask friends and family who have bought or sold in the past who they would recommend.
How Can We Help?
We hope that you’ve found this information informative. If you need buying or selling guidance or help in the Summit or Park County area please reach out! We will also continue to provide you with relevant and up-to-date information here on our blog.
If you would like more information on how the Summit and Park County real estate market is doing, you can also sign up for our detailed monthly market report by clicking this link.
Best Regards,
Scott & Anne Lindblom
Broker Associates
[email protected]
[email protected]
Scott: 970-485-4065
Anne: 608-345-2734
www.LindblomGroupe.com