First-Time Home Buyer: Where to Begin?

The last year has seen more first-time buyers than I could've ever imagined. This is in part because of the absurdly (and artificially) low interest rates on mortgages. It's only natural that more people would be buying when rates are this low. While a huge factor, the bursting of the bubble in 2008 played a larger role in this wave of virgins. After spending years on the sideline because they were scared their wealth would disappear in a real estate investment, 2012 has seen a lot of first-time buyers finally taking the plunge. But most still have a big question to answer before diving in: "where on earth do I begin?" The first mistake that a lot of buyers make is looking at homes (both in person and online) before meeting with a lender. Unless you are looking to make an all cash purchase (in which case you probably already own property), the lender holds the golden ticket to the candy factory. In just 30 minutes (more often less), the lender will be able to let you know what your monthly payments would be at multiple price points, and where your max price is (I advise arriving at your max price based on your comfort level, not the highest priced property you could possibly afford). There are tons of financing options out there, from FHA (a government loan with buyers putting down 3.5% of the purchase price), to conventional, to portfolio loans, you need an expert to educate you in which would best work for your situation.

Talking to a lender is great, but make sure that you are working with a lender that is going to be able to deliver on the promises they make during that first conversation. The absolute worst thing that can happen is to arrive for closing and the funds never arrive (happens way more than you would think). Ask your broker for some recommendations for lenders that they have worked with in the past, as well as doing your own research (real estate brokers CANNOT accept kickbacks from lenders, as part of RESPA, so if they give you a recommendation, there's a reason for it). Don't let the origination fee(s) be the reason that you choose a lender. You need one that knows what they are doing.

Once you are comfortable with the financing aspect, then it is time to start the property search. If you're looking in Denver, a g