Wednesday, February 8, 2017 / by Kevin Schumacher
The following post is written by our Marketing Coordinator who is currently under contract for a home in Northern Colorado.
"My name is Jordan Buchholz and I am a recent graduate of the University of Northern Colorado. I am the marketing coordinator for the Kevin Schumacher Team - RE/MAX Eagle Rock. Before working in the real estate industry, purchasing a home was not something I even considered or thought would be a possibility for me.
I had a strong inhibition to buy considering the market conditions in Northern Colorado being outrageously expensive and that this decision is not something that you can take lightly, especially as a recent graduate. I figured I would eventually get around to purchasing at some point but that this was not the right time and honestly didn't know if that right time would ever come. I feared that by the time I did save enough to put down on a home that I still wouldn't be able to afford purchasing in Northern Colorado and would have to move to afford to live.
This has changed after I became educated on opportunities that are available in Northern Colorado- in the housing inventory, current interest rates and market expectations in addition to the great loan programs available!
1. USDA and CHFA Loan Programs
Before working in the industry, my understanding was that you needed anywhere from 3-10% as a down payment on a home upfront and not financed. I also didn't fully understand everything that went into a monthly payment of a home.
"As embarrassing as it is to admit, when my fiancé and I first got pre-qualified we stopped looking because we were estimated at a payment we thought was simply just the mortgage payment. In reality was an estimation of the mortgage, insurance, and property taxes."
USDA is a loan program that helps lower income families purchase homes at 0% down. These loans are only offered in certain cities and you do need to qualify for them, but this program is great for millennials who are looking to get a start.
The other loan option that I would recommend for millennials is a CHFA loan, which I am personally using. This program is available to families with lower incomes and do not have restrictions on cities. The program helps to cover your 3% down payment at $1,000.00 out of pocket costs. Now of course you need to consider closing costs in what you will owe out of pocket, but with the TRID lending law these costs will be disclosed upfront and the agent you choose can help in deferring some of these closing costs potentially to the sellers. It is all a financial game where your debits and credits will match in the end. Working with an Expert Advisor and lender upfront will help you to understand the full cost of your investment and the ins and outs of how the process works.
I do also want to mention that by choosing this loan option you will be required to take a CHFA Buyer class in which they will go over the basics of being a homeowner. These classes are offered around Northern Colorado and are free to attend in person but you can also take them online for a fee. From what I have heard, the online course can take up to eight hours to finish and can get a little tedious. If you go in person the class is a bit more interactive and will take a shorter amount of time. Make sure that you are paying attention because there will be a short phone interview following the class.
2. Getting Pre-qualified
If you are considering purchasing a home, the first step in the process is to reach out to a lender and get pre-qualified. If you are unsure of how to find a lender, reach out to friends and family that know a Realtor® or do research to find out who the top agents are in the area and see who they recommend as a lender.
Don't jump on the first lender that you talk to. Like you do with any major decision in life, consider your options. The information that is needed upfront to get pre-qualified can be given over a short phone call and a signature allowing the lender to run your credit report. They will then let you know what they estimate the amount that you qualify for.
Another concern that I have heard from peers is that you need to be married in order to get pre-qualified with a partner, otherwise you would need to qualify separate. This is a myth. You can absolutely get qualified with another individual you intend on purchasing a home with.
3. Housing Inventory Opportunities
I will admit that the Northern Colorado housing market is tight, there is limited inventory and there are multiple buyers for many homes.
With that said, there are still really great opportunities if you afford yourself the time to look. My housing search took two months to find our new home. We wanted to make sure that we were getting in a property that will appreciate over the coming years and allow ourselves to start earning equity. This is not something that will be relatively hard in Northern Colorado considering that the market here is appreciating at a much higher percentage than the rest of the country, but you do need to consider the future outcome in the next years when looking to purchase. Working with a great agent upfront will allow you the opportunity to have a custom search set up with your preferences and needs in mind, in addition to the advice from an expert in the industry that can lead you in the right direction.
4. Current Interest Rates
The rates that are currently available are still historically low. They are beginning to rise though, so if you are considering purchasing now is the time to start the process when you can lock yourself in at a lower interest rate. CHFA loans do have a slightly higher interest rate than your standard conventional loan, but it is not much higher of a rate and when you consider the value of the program it will absolutely outweigh the costs in my opinion.
5. Market Expectations
The housing market in Northern Colorado has experienced a higher appreciation than most of Colorado and other states. This last year there was double digit appreciation in some areas such as Greeley that appreciated 12% according to Zillow and expected to appreciate by 5.6% in 2017. Northern Colorado has room to grow and it will only continue to do so. This year alone there will be major construction that will push home values up such as the 500 million dollar project that is already breaking ground just across I25 from the Budweiser Event Center. If you are considering looking for a home do so sooner rather than later so you can ride the appreciation curve rather than trying to buy in at a higher price in the future.
The Bottom Line
My intention with this blog is not to sell you a home, but to give millennials a perspective from an individual, a peer, who has become educated to the industry and current market. It is not as scary as it seems. If you are at the point where you want to look into purchasing a home, please afford yourself the opportunity to at least get pre-qualified and talk with an agent because there are opportunities beyond what you think! You have nothing to lose and plenty to gain."
If you have any questions regarding Jordan's millennial home buying experience or have questions for one of our Expert Advisors please contact our team at Kevin@KevinSellsNoCo.com or (970) 373-2616.