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 providing you to obtain full, formal loan approval. This contingency is usually 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 set 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 expires and you neglect to close the purchase transaction, you can forfeit your earnest money deposit. For this reason it is extremely essential to make sure you are not committing to a loan contingency in an offer negotiation unless you are absolutely positive 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 in advance of making an offer on a property is the most effective tactic for any home buyer in Colorado that can help you obtain the best deal possible, especially if you want to make small down payment. The seller is often wary 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 flexibility, by being perceived as feeble buyer rather than a strong one. This is why it is extremely essential to get full loan approval in the beginning 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 duration of time in which all necessary items must be completed, including achieving loan approval, property appraisal, home inspection reports, termite inspection, etc. Give yourself ample time for all essential items to be completed for this significant purchase you are about to make. Usually, purchase contracts are created 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 associated need to have that long of a grace period to perform all aspects of the essential items.
As part of the negotiation in your purchase contract, you and the seller will together agree upon the quantity of time called for to complete all the home inspection processes that are required. Employing an external third party service to carry out these inspections is highly advised, especially for a first home buyer in Colorado. You will be given a report by the home inspection company that you should evaluate very rigorously to be certain there are no material flaws 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 should head back to the negotiating table and talk about a large reduction in the purchase price to recompense the cost of any required repairs. Once your home inspection contingency has ended, 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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