Soon the real estate market will enter what is generally considered the prime home buying/selling season, which is March through September. In the Denver metro area inventories are tight, and it continues to be a seller’s market. Despite it being a seller’s market, in many ways it is still a very advantageous time to buy due to the following factors:
- Although higher than last year, interest rates remain in the 4% range for most borrowers, which enhances affordability;
- Mortgage approvals and underwriting have been streamlined over the past 3 or 4 years and getting approved for a mortgage has become significantly easier and faster;
- There are lower down payment requirements for conventional loans as well as FHA mortgages (as low as 3%). For those who qualify there are also down payment assistance programs;
- Rents continue to increase, making owning your own home an attractive option from a long term financial perspective.
There is a lot of competition to find and buy the house you want. This is true for all buyers, not just first-time buyers. So unless you are in a position to pay all cash there are some specific recommendations that can help you gain an advantage over other buyers.
Get pre-qualified early. It is never too early to talk to a lender about the mortgage options that are available and to address any areas that can be improved or need to be addressed prior to the time you will actually start looking. This not only applies in situations where the credit score may be low, but also is beneficial for someone who may have a credit score of 700 and could get a better interest rate if their score were 720. By starting early, you can put yourself in the best position.
Starting earlier will also allow you to determine the mortgage amount and monthly payment that are comfortable given your financial situation. You will also get valuable information all the different types of loans that are available and the amount of cash that will be required to purchase a home.
By taking these steps early, when you are ready to start seriously shopping, you will save a tremendous amount of time by knowing what your requirements are, what you can and cannot do, and you will be in a position to make the strongest offer possible.