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First Time Home Buyer - Getting Rid Of The Enigma Of Buying Your First Home - Part 1
There are four things that every first time home buyer in Colorado should know. The first of these involves Loan Contigency. Loan contingency is the period of time the seller is giving you to obtain full, formal loan approval. This contingency is typically between 15 and 21 days depending on what you and your Real Estate Agent have arranged for on your behalf in the contract. The earnest money deposit that you set into an escrow account at the time the offer is approved will be put in jeopardy right after that contingency for the loan has expired. In fact, pursuant to the terms of the contract, if the loan contingency expires and you neglect to close the purchase transaction, you can lose your earnest money deposit. For this reason it is extremely important to make sure you are not agreeing to a loan contingency in an offer negotiation until you are absolutely positive you will be buying the home and you know you do not need to count on on financing approval to close the transaction. Formal pre-approval will help to prevent any problems in this area.
Seeking complete pre-approval for financing before making an offer on a property is the most effective strategy for any home buyer in Colorado that can help you get the best deal possible, especially if you plan to make small down payment. The seller is often wary of the stability and dependability of the buyer if the buyer is only capable of getting a down payment of 10% or less. This can cause the buyer to lose a significant amount of negotiating power, by being perceived as feeble buyer rather than a strong one. This is why it is very important to get full loan approval in advance and provide a written verification of the loan approval when an offer is turned in. This shows it is complete, and you are seen as a cash buyer.
The contract period is the period of time in which all essential items must be completed, including achieving loan approval, property appraisal, home inspection reports, termite inspection, etc. Give yourself enough time for all due diligence to be completed for this very important purchase you are about to make. Generally, purchase contracts are created for a period of 30 days, 45 days or 60 days. However, it is really common for a purchase contract to be composed with terms in excess of 60 days if the parties interested need to have that long of a grace period to accomplish all aspects of due diligence.
As part of the negotiation in your purchase contract, you and the seller will mutually agree upon the quantity of time called for to complete all the home inspection things that are required. Employing an outside third party service to accomplish these inspections is highly advised, especially for a first home buyer in Colorado. You will be provided with a report by the home inspection company that you should review very thoroughly to be certain there are no material flaws in the property that you were unaware of, and which could consequently have an impact on the value of the property. If there are material defects, you should head back to the negotiating table and discuss an ample reduction in the purchase price to offset the cost of any required repairs. Once your home inspection contingency has ended, you no longer have the power to go back and renegotiate the purchase price to remedy any issues revealed by the home inspection.
First Time Home Buyer - Getting Rid Of The Enigma Of Buying Your First Home - Part 1
Loan contingency is the period of time the seller gives you for formal loan approval. Pre-approval tells you how much home you can afford. The contract period is time in which everything must be completed. You and the seller agree on the time needed to complete all home inspection procedures.
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