First Time Home Buyer - Shedding Light On The Enigma Of Purchasing 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 offering you to obtain full, formal loan approval. This contingency is typically between 15 and 21 days which depends on what you and your Real Estate Agent have arranged for on your behalf in the contract. The earnest money deposit that you put 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, according to the terms of the contract, if the loan contingency has expired and you neglect to close the purchase transaction, you can relinquish your earnest money deposit. For this reason it is extremely important to make sure you are not committing 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 count on on financing approval to close the transaction. Formal pre-approval will help to prevent any complications in this area.

Seeking complete pre-approval for financing prior to making an offer on a property is the most effective method for any home buyer in Colorado that can help you get the best deal possible, especially if you want to make small down payment. The seller is often leery 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 waste a significant amount of negotiating ability, by being perceived as feeble buyer rather than a strong one. This is why it is exceedingly important to get full loan approval in the beginning and provide a written verification 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 span of time in which all due diligence must be completed, including achieving loan approval, property appraisal, home inspection reports, termite inspection, etc. Give yourself plenty of time for all due diligence to be completed for this significant 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 common for a purchase contract to be composed with terms exceeding 60 days if the parties involved need to have that long of a grace period to finish all aspects of due diligence.

As part of the negotiation in your purchase contract, you and the seller will together agree upon the quantity of time needed to complete all the home inspection things that are required. Employing an external third party service to complete these inspections is highly advised, especially for a first home buyer in Colorado. You will be supplied with a report by the home inspection company that you should review very rigorously to be certain there are no material defects in the property that you were unaware 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 head back to the negotiating table and consider an ample reduction in the purchase price to recompense the cost of any required repairs. Once your home inspection contingency has expired, you no longer have the power to go back and renegotiate the purchase price to remedy any issues revealed by the home inspection.

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