First Time Home Buyer - Doing Away With The Complexity Of Being A First Time Home Owner - Part 1

There are four things that every first time home buyer in Colorado should know. The first of these has to do with Loan Contigency. Loan contingency is the period of time the seller is offering you to obtain full, formal loan approval. This contingency is normally between 15 and 21 days depending on what you and your Real Estate Agent have managed to obtain on your behalf in the contract. The earnest money deposit that you put into an escrow account at the time the offer is confirmed will be put in jeopardy right after that contingency for the loan has expired. In fact, according to the terms of the contract, if the loan contingency has expired and you do not close the purchase transaction, you can relinquish your earnest money deposit. For this reason it is extremely imperative to make sure you are not agreeing to a loan contingency in an offer negotiation until you are absolutely certain you will be buying the home and you know you do not need to rely on on financing approval to close the transaction. Formal pre-approval will help to prevent any issues in this area.

Seeking complete pre-approval for financing prior to making an offer on a property is the perfect method for any home buyer in Colorado that can help you acquire the best deal possible, especially if you plan to make low down payment. The seller is often leery of the stability and trustworthiness of the buyer if the buyer is only capable of getting a down payment of 10% or less. This can cause the buyer to forfeit a significant amount of negotiating ability, by being perceived as soft buyer rather than a strong one. This is why it is exceedingly crucial to get full loan approval in advance and provide a written proof of the loan approval when an offer is made. This shows it is complete, and you are seen as a cash buyer.

The contract period is the duration of time in which all due diligence must be completed, including receiving loan approval, property appraisal, home inspection reports, termite inspection, etc. Give yourself plenty of time for all necessary items to be completed for this very important purchase you are about to make. Generally, purchase contracts are drawn up for a period of 30 days, 45 days or 60 days. However, it is really normal for a purchase contract to be composed with terms greater than 60 days if the parties involved require that long of a grace period to finish all aspects of the necessary items.

As part of the negotiation in your purchase contract, you and the seller will mutually agree upon the extent of time needed to complete all the home inspection processes that are required. Employing an external third party service to complete these inspections is highly suggested, especially for a first home buyer in Colorado. You will be supplied with a report by the home inspection company that you should examine very thoroughly to insure there are no material defects in the property that you were ignorant of, and which could consequently have an impact on the worth of the property. If there are material defects, you and your Real Estate Agent should return to the negotiating table and consider a decent reduction in the purchase price to offset the cost of any essential repairs. Once your home inspection contingency has expired, you no longer have the control to go back and renegotiate the purchase price to remedy any issues revealed by the home inspection.

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