What Do You Need To Buy A House? - These 5 Things!

• A down payment: A portion of the purchase price you pay upfront.
• A pre-approval for a mortgage: A commitment from a lender to provide you with financing up to a certain amount based on your creditworthiness and income.
• Proof of income and employment: Documentation that verifies your ability to repay the mortgage.
• Good credit: A good credit score and history can help you get better interest rates and loan terms.
• Closing costs: Fees associated with purchasing a home, such as a title insurance, appraisal, and attorney's fees.
• A real estate agent: An agent can help guide you through the process and negotiate on your behalf.

The first step in buying a home is to acquire the money to buy a home. For most people, that means getting a mortgage. A mortgage is a type of loan used to buy a home. So how do you get a mortgage pre-approval?

There is no end to the number of places you can go online to get a mortgage pre-approval. We have some excellent mortgage lenders in Colorado Springs who we regularly recommend. The right mortgage lender will help you understand your borrowing options and make the whole process as easy as possible.

Once you have found a mortgage lender, they will run a credit check, ask you some questions about your current financial situation, and determine your eligibility based on these answers. They will work with you throughout the buying process once you have found a house. They will also issue you a pre-approval letter to share with Realtors, buyers, and home builders. This letter lets everyone know that you can purchase a home within the price range recommended by the lender.

Earnest money is money you must provide upfront when buying a house. Think of earnest money as your way of saying, "I EARNESTLY want to buy your house, so I am putting this money with my offer." It's like a deposit to prove you are serious about purchasing the seller's home.

In Colorado Springs, the earnest money is usually around 1% of the home's purchase price. If all goes well and you get to the closing table with the seller, that money is credited back to you at closing. If you terminate your sales contract within your inspection or loan objection deadlines, you will typically receive your earnest money back. If you are past those dates, it's much harder to get your earnest money back. Earnest money is usually held by the title company or listing agent's office.

Once you talk to a mortgage lender about your pre-approval, they will be able to tell you what amount you need as a downpayment to purchase a home. Different loan types, like VA loans or USDA loans, do not require a down payment and offer 100% financing. You will need to check with your loan officer to determine if you are eligible for this type of loan product.

The most common downpayment required is usually between 3% and 5% of the purchase price. Some lenders will require a 20% down payment if you already own a home and want to purchase a second one. In Colorado Springs, most loans above $726,000 will require a minimum down payment amount of 10% down. There are many different options available that your lender will help you navigate. Contact us if you need a recommendation for an excellent local loan officer, and we can help you.

When you purchase a home with a mortgage, your mortgage company will charge fees for originating and generating your loan. These can be anywhere from 1% to 4% of the loan amount, depending on the type of loan you choose. Talk to your loan officer to get a reasonable estimate of what your closing costs might be for your loan type.

When you write the purchase contract, it is also possible to ask the seller to contribute to your closing costs. This option will depend upon the market you are in and the demand for homes in your price range. If homes are selling in a day or two in your area, it's challenging to get a seller to agree to offer money towards your closing costs. I typically advise saving that money just in case you find the perfect house, but the seller will not provide any closing cost assistance.

Once you have found a home and have an executed contract with the sellers, you'll need to hire a home inspector. In Colorado Springs, we usually write a 7 to 10-day inspection period that allows enough time for homebuyers to hire a home inspector to ensure no significant issues with the home.

The average cost of a home inspection can be from $250 to $600+, depending on the size of the home. Depending on the property you purchase, you may also consider hiring radon, septic, well, structural, mold, pest, or methamphetamine inspection. Your real estate agent will help advise you on these options and also help you determine the extra expense of these additional inspections. If you require multiple reviews, make sure that you write enough time into your Inspection Deadline to complete all of them.