How To Buy Your Home In Colorado Without Overpaying

August 27, 2021

It’s a dream we all have—to be a homeowner!

If you’re currently renting, you might feel trapped within the walls of a house or apartment that doesn’t feel like yours. How could it when you’re not even permitted to bang in a nail or two without a hassle! Or, you might be in a situation where it’s time for you to say goodbye to your starter home and move up to a bigger and better place to fit your growing family. Even for those who are empty-nesters and are ready to downsize, it’s every prospective buyer’s top priority to purchase their next home without overpaying in the Colorado.

It doesn’t matter how insurmountable your financial situation may seem. The truth is, there are some little known facts that can help you get into the home you want without overpaying. Below are some tips and tricks to keep you from overpaying whether you’re a first time homebuyer or a crafty veteran in the real estate market.

Know the comps To avoid overpaying, you need to know what comparable homes in your area have sold for recently! In the industry, these are known as “comps,” or “comparable sales.” This way, you can get an accurate picture of local home values by looking at the price someone actually paid.
Make a budget! Before you even start going on home tours, figure out what your budget is. How much money do you have saved and how much of your savings are you willing to tap into for your down payment? How much can you afford to pay for your monthly housing costs including your mortgage, home insurance, and property taxes? Figure out how much you would like to spend and what your absolute limit is.
Don’t get sucked into a bidding war. If you know you’re in a seller’s market (little supply with lots of demand), making an offer that’s below the asking price probably won’t get you the house, and it might put you in a bidding war situation. Typically, it’s better to be preapproved with a mortgage loan and make a strong offer right off the bat. A bidding war can push home prices far beyond what it’s worth, or what works for you financially. It’s crucial to know when it’s time to step away based on your budget and what other similar homes are worth.
You may be able to get your lender to help you with your downpayment and closing costs. Even if you do not have enough cash for a down-payment, if you are debt-free, and own an asset free and clear (such as a car for example), your lending institution may be able to lend you the down-payment for your home by securing it against this asset.
You may be able to find a seller to help you buy and finance your home. Some sellers may be willing to hold a second mortgage for you as a “seller take-back”. In this case, the seller becomes your lending institution. Instead of paying this seller a lump-sum full amount for his or her home, you would pay monthly mortgage installments.
Don’t let your heart make all the decisions. If you find only one home that you really like, you’re at the mercy of the seller and may be prompted to offer more than you want to pay—or even more than the property is worth. But if there are several different homes you’re interested in, landing any one particular house isn’t nearly as important. You can easily walk away from a property if a seller is asking too much and isn’t willing to accept a reasonable offer based on what comparable homes are selling for.