Are you a first-time home buyer? Here’s how to start the process.

Dave,

This may seem like a simple question, but I need your help! I’ve been renting for the last five years and I’ve decided I’m finally ready to take the jump and buy my first home. The only problem is I don’t know where to begin. The whole process seems a bit intimidating. To add to the confusion, I’ve received a lot of mixed advice from family and friends. Some say that I should find a real estate agent first, and others say I need to find a lender before talking to anyone else. How do I start the process and do you have any tips that will help me along the way?

A huge thank you for answering my question & Merry Christmas!

Brittany, Grand Junction

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Brittany,

You are right! It is and it isn’t a simple question. I concur, it is time to get off the renting train as interest rates and overall affordability are about as good right now as I believe we are going to see for a while.  I am very confident that we have seen the bottom on interest rates.   Interest rates are going to be moving up, albeit slowly, as we move forward and along with interest rate hikes, I believe we will continue to see home prices increase. Again these increases will be steady and unlikely to move the needle too drastically unless we see some significant positive local job growth. All this means is that you can buy more home for your money right now than you likely will be able to in the coming years! Now is a great time to make the jump, if you are going to jump!

“The process really is quite simple if you follow a couple of basic steps. ”

— Dave Kimbrough

There is one thing for certain, when you start thinking about buying a home or doing anything in real estate you quickly realize that everyone you know and meet is an expert! It’s like announcing that you are having trouble with your teenager. Try that one and watch all the arm chair quarterbacks emerge and tell you how to right the teenage ship.  Keep in mind that many of them, maybe most, never had teenage kids or have not had them in years. Buying a home is similar, but should be far less intimidating than managing the teenage years! Hard to know who to listen to. Take it all in and use ALL of it, but just like anything else take it with a grain of salt. The process really is quite simple if you follow a couple of basic steps. First, find a good (emphasis here is on good, not just any) Real Estate agent. When you hook up with a good Realtor and trust me there are many good ones out there despite what you may hear. He/she will help you get started with the process and get you engaged with a quality mortgage lender.

Establishing a relationship with a local mortgage lender is a very important step for this purchase, and will also be a valuable resource for needs in the future. Surround yourself with quality people who know their jobs and your house hunting will prove to not only to be fruitful, but also enjoyable. Going to see the mortgage lender right out of the gate will help you determine how much you are comfortable spending (notice I said comfortable spending, not how much you CAN spend!). You need to establish a budget that is financially comfortable and this will help you target the properties that fall within your desired spending range. There is nothing worse than going out and looking at and falling in love with properties that don’t fit into your budget (you’ve seen it on HGTV!!). If you start looking at homes that are $225,000 only to realize you can comfortably afford $180,000, the $180’s will never look as good as they should have. When you begin looking at homes you want to begin looking in the correct price range.

Again, listen to all those who can’t resist giving their “free” advice, however, start with finding the right real estate agent and the right lender and they will help lead you down the path to home ownership by taking the correct steps in the correct sequence. Once you have found those two partners, you really have what you need to have a very positive experience…probably a much more positive experience than raising teenagers!

Dave Kimbrough
The Kimbrough Team

Common closing expenses for sellers

Dave,

We are currently in the process of selling our home and it just went under contract—yay! We want to know what to expect financially from this point forward. What are common closing expenses for sellers?

 Thanks!

Cheryl, Palisade

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Cheryl,

Oh my gosh, this is such a great question and one that I get ALL the time! As a seller you have the privilege of paying the sales commission you agreed to with your listing agent, assuming your home is listed with a Realtor. Costs associated with selling your home that are the sellers responsibility are varied, but you can almost always calculate an additional 1% if your sales price is UNDER $300,000 and .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight over estimate of your closing costs. 

The most common cost that is overlooked is your property tax. What most people don’t fully realize, as I did not prior to becoming a real estate agent, is that our property taxes are paid in arrears. It’s probably something most folks just don’t think much about and it often times is a bit of a surprise. How it works is, the title company will pro-rate the current taxes from January 1 to the day of closing and you will have that amount debited on your settlement sheet. The two largest debits you will see (outside of real estate commissions and your mortgage payoff) will be the taxes and the title insurance policy. Title insurance simply indemnifies that the title to the property will be passed from you to the new owner in good standing and free of any liens. For a $250,000 home you can expect this expense to be in the $900-$1000 range, these costs are on a sliding scale based on purchase price.

The most discussed fee on the sellers settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title (as discussed above). In order to ensure that the amount that is owed is covered, the title companies always hold out an amount significantly over (generally around $200) your typical water and sewer bill. This ensures there is enough to pay it off and they will refund the difference back to you shortly after close. This one always creates a fair amount of discussion about how you never have had a bill that high etc…, but believe me they will refund you the difference in short order. Always remember that your other services like gas, electric, telephone, television etc. are your responsibility and you should call 2 –48 hours prior to close and let them know you will be moving and the service will be transferring to a new owner on the date of close.

One last tip. Your mortgage statement always provides a payoff for you to reference, however the day it is printed you start accruing interest so your payoff is always higher than what is printed on your statement. I always tell our sellers to just add one extra payment to the amount on the settlement statement and that will provide a safe payoff amount.  In my experience when closing day comes people are happy they overestimated and get a little money back, rather than under estimate and have to go digging for that little extra! I hope this help and by following these guidelines you should have a safe estimate of your closing costs. Congratulations on getting your home under contract and best of luck on your new journey!

Dave Kimbrough
The Kimbrough Team

What type of roofing material is the best investment?

Dear Dave,

We will be needing a new roof in the next year or so and I wanted to get your opinion on different materials and options that may be available. We typically see shingles, but more and more we are seeing metal roofs and understand that is a more recent trend. Do you have an opinion on which of these choices may be best? Are there any other materials that you would recommend that might be better?

We will be retiring and selling our house in a few years, so we want to get our money’s worth.

John and Kate, Grand Junction, CO

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John and Kate,

When making home improvements it is always wise to consider your return on investment prior to making any selections or firm decisions.  However, selecting a new roof and basing your decision on return on investment can be a tricky proposition. One thing I have learned over the years is, there are a few basic characteristics every home buyer expects as a given when purchasing their home and having a “decent” roof is one of those expectations. Buyers expect, and rightly so, that the roof to be in good condition with a minimum of 3 years remaining on the anticipated life expectancy.

Because it is a basic expectation for any buyer that the roof be in good repair, you can assume that very few, if any, buyers are going to be willing to pay significantly more for the home because the roof is new or newer. They will appreciate that your roof is in better condition and it may help sell your home faster or help it beat out another competing house, but long as the life expectancy is more than 3-5 years don’t expect to reap any real tangible monetary benefits. That being said, you do have the opportunity to impact the price of your home, monetarily, by replacing your roof with a different material or texture that will impact your home's appearance.  

Buying a home is an emotional experience and homes that have a unique appearance or unique characteristics certainly can get a leg up on the competition during the sales process. Consider using a standing seam metal roof or a thicker architectural shingle for your next roof!   Metal roofs provide a fresh look and are becoming very popular. If your home lends itself to mixing the surfaces, you can create wonderful street presence that will help you stand out from the other homes that are for sale and even other homes in your neighborhood. You can also provide a pop of color, but don’t go too crazy with the color. A thicker architectural shingle can also look wonderful and provide some depth where none previously existed. These thicker shingles generally are used when replacing shake shingles, as they help maintain some of the original look. You can also go the way of a tile roof, but be careful that you do not over build your neighborhood or over improve your property. 

There are options out there to dabble with some new looks, however note that these options will be more expensive and less budget friendly than a standard 30 year architectural shingle. Be mindful of your budget and anticipated return and don’t be afraid to ask for other professional opinions prior to making the leap on your next roof. Hope this helps and I bet it turns out great!                                                            

Dave Kimbrough
The Kimbrough Team