4 Things You May Not Know About Buying Northwest Denver Real Estate

Jason Sirois January 2, 2023

The market for homes for sale in Denver is hot right now, and there’s a lot to like about living here. Before you begin seriously shopping for Denver real estate, it’s important to take time to prepare for the process and fully understand what you’re getting yourself into. By the time you’re done reading this article, you’ll have all of the information you need to test the Denver real estate market.

Not every lender will offer the same interest rate

Not every lender will offer the same interest ratePhoto courtesy of Pexels
One of the most common mistakes new homebuyers make is only talking with one potential lender. They don’t know that different lenders can offer different interest rates. This number corresponds, to a degree, with the national interest rate, but it can still vary based on which individual or group you’re speaking with. Give yourself enough time to talk with multiple lenders, and don’t feel bad about shopping around to see who can give you the best deal.
Before you speak with a lender, there’s some information you’ll want to have ready. Lenders often ask to see recent tax returns and proof of income to confirm that you’ll have enough money coming in on a regular basis to meet your regular mortgage obligations. This is especially important if you’re self-employed—most lenders won’t consider issuing a loan to someone who is self-employed unless they have two years’ worth of tax returns to show that they can afford to make payments on the home.

There’s a difference between a conventional loan and an FHA loan

There’s a difference between a conventional loan and an FHA loanPhoto courtesy of Unsplash
Not every buyer will use the same type of loan to purchase a home. Most people are familiar with conventional loans, which can require anywhere between 5% and 20% in the form of a down payment. You can’t secure a conventional loan unless you have a credit score of at least 620 and a maximum debt-to-income ratio of 45%. However, this isn’t the only type of loan that you can use to purchase a home. Many homebuyers take advantage of FHA loans. With an FHA loan, you’ll only have to put down 3.5% to purchase a home, and you don’t need a credit score higher than 580. You will, however, need to have mortgage insurance for the entire duration of your loan.

You’ll have plenty of competition

You’ll have plenty of competitionPhoto courtesy of Unsplash
Perhaps you’ve heard that the market for Denver real estate is competitive, but you may not fully understand what this means. It’s common for Northwest Denver homes to receive multiple offers. Some of these offers may even have waived contingencies, which is an attempt by the buyer to make their offer more appealing. Contingencies in a housing contract give the buyer a chance to walk away from the deal if certain conditions aren’t met. For example, an appraisal contingency allows the buyer to negate the deal if the home doesn’t appraise for a fair market price. When this happens, it makes it difficult for the buyer to secure funding from their lender. If the buyer chooses to waive the appraisal contingency, they’re saying that they’ll find a way to purchase the home even if the selling price is higher than the appraised value. This most often means bringing more cash to the table.
Regardless of what contingencies are in your contract (or which ones are absent), you should be prepared to pay well over the asking price when you find a home that you like. This often happens with homes that are newer to the market. Since properties are in high demand, many prospective buyers are ready to act quickly when a new home comes onto the market. Homes can last less than one week on the market, and a seller may choose from multiple competitive offers. It ultimately depends on the home you’re looking at, and how long it has been on the market, but this probably isn’t the time for you to try and negotiate a lower price with the seller.

You’ll want a good insurance policy

You’ll want a good insurance policyPhoto courtesy of Pexels
Across the state of Colorado, more homebuyers are experiencing damage from floods and fires. While you can’t eliminate the risk of these issues happening, you can take steps to protect your home (and your bank account) from any damage that can occur. First of all, you should know that many insurance providers won’t issue a policy unless they first see an inspection report on the home. This can be a good thing to remember if you’re thinking about waiving the inspection contingency when you make an offer on a home. Additionally, many Colorado residents don’t have a policy that would fully cover the loss of their homes. Check with your insurance provider to see what your policy dictates, and take the time to read the fine print in the contract so you’ll know whether or not the policy protects your home and its contents. It may even be wise to work with a professional who can help you document your possessions and their values in detail so that you can provide this information after an accident if necessary.

You don’t want to work alone

Many homebuyers—especially if this is their first time shopping for homes for sale in Denver— find that it’s much easier to proceed when they have someone with experience who can help them. Jason Sirois loves helping people shop for Denver real estate. He uses his expert negotiation skills to help his clients secure the best possible deal on the home of their dreams. He has tremendous knowledge of the Denver area and an acute awareness of where the market may be headed in the coming months. When you’re ready to start shopping for homes for sale in Denver, reach out to Jason and his team.

*Header photo courtesy of Shutterstock

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Jason loves Denver and he's passionate about helping people achieve real estate goals, which is much bigger than buying and selling houses.