Information you need
It’s so important that the agent you choose to guide you through this journey is your trusted expert and advocate. We have a team of experienced, qualified real estate professionals ready to help you find homes for sale that meet all of your criteria.
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Pre-qualification Vs. Pre-approval+
Prequalification and Pre-approval are often used interchangeably, but they mean different things. Prequalification (often shortened to prequal) is a basic overview analysis of a borrower's ability to get a loan. The borrower's financial information is collected verbally, but not verified.
With a Pre-approval, you submit several financial, tax, and employment documents; as this is a more thorough process. Neither is a guarantee that you'll be offered a loan, although a Pre-approval provides for a stronger and more reliable gauge of loan worthiness. A Pre-approval does not include all the paperwork that a loan will require though. Title work and appraisal (both items will cost you money) will need to be completed or in process when you actually apply for a loan. When you are Pre-approved, you cannot get these, because you often don't have a property identified as of yet to make an offer on. With a Pre-approval, you, the borrower, are being approved for the loan from a financial standpoint. The property itself will still need to be approved once it's identified and your purchase offer has been accepted when you're officially under contract.
So, why would you ever bother to get Prequalified? Prequalification provides buyers a starting place, letting a buyer know if they can possibly get a mortgage loan. It is fast and easy to do. There is no point in going through the Pre-approval process if you don't have the income, assets, or credit score to move forward from a prequalification perspective.
However, if you can get Prequalified for a loan, you should go through the Pre-approval process next. Realtors® and sellers will most likely require this step before going too far along the buying or selling process with you. They want to insure that you can actually get a mortgage loan before showing homes that you may not qualify for, saving all parties time, money, and frustration.
If you provide all the needed information, what could go wrong? Why is Pre-approval necessary? When you get prequaled you might think you have all the information you need.
For example, if you say you think you have $8,000 in your bank account, you are Prequalified based upon that figure. Later you realize that you really only have $6,000, so now you may not have enough assets to qualify for a loan.
However, Pre-approval isn't a sure thing either. If you get Pre-approved based on March's bank statements that say you have a balance of $7,600, but by the time you go through the application process you only have $5,600 showing on your April statement, that may cause difficulty in your loan process as well.
It is critical that you maintain your employment, bank balance, income and credit score during the entire loan application process. Prequalification and Pre-approval are based upon these numbers; should they change, so does your eligibility.
The first step will be to get Prequalified for a loan, second step is to get Pre-approved. Then shop for a home based on the amount you are Pre-approved for, and then apply for the home loan once you have an accepted offer and are under contract. If you follow these steps, it will save you a lot of time and aggravation on the mortgage loan process.
When you're ready to begin your loan application, you're going to need some documentation to provide to your lender; be sure to provide originals unless otherwise noted. It's a good idea to start gathering these documents in advance and identifying where they're at so they can be easily retrieved for your lender to review. Even if you don't think you'd be eligible for a loan, moving forward with a lender in this process will definitively identify your loan eligibility and financial areas that need improvement. Your lender will work with you in developing a plan to get you to a point of eligibility, and is a powerful resource and partner for you in attaining that goal.
- Sales Contract on the purchase of your new home, when finalized
- Copy of Sales Contract on the home that you’re selling. This only applies if you’re selling your previous home to assist in paying for your new home
- Original Paystubs for the past 30 days that show year to date earnings, your name and Social Security Number
- Most recent 2 years tax returns with all schedules
- Most recent 2 years original W2 forms
- Most recent IRA/Keogh/401K/Profit Sharing Statements
- Award letter and copy of most recent check for Social Security, retirement, or disability
- Year-to-Date Profit and Loss Statement/Current Balance Sheet if you’re self-employed
- Residence History for the last 2 years of your past addresses and dates
- Statements on all recent outstanding loans and credit cards
- Bank statements for all accounts, bringing 2 months documentation to prove the source
- Transcript or Diploma if you were a student in the last 2 years
- For real estate you currently own, bring addresses, loan information, and leases if applicable
- Landlord’s name, phone number, address, and cancelled rent checks for past 12 months
- Relocation agreement if you’re being transferred into the area by your employer
- Bankruptcy papers including schedule of creditors and discharge papers if applicable
- Check for appraisal and credit report fees
Real Estate Ownership in Colorado
In Colorado there are three common ways Buyers can take title for the real estate they purchase: tenant in severalty, joint tenancy, or tenancy in common. Colorado state law prevents your agent from advising you on how you should take title, we can only educate you as to the variety of options you have to choose from. We strongly advise our Buyers to consult with an attorney or estate planner to review and receive professional legal advice as to which type of ownership is optimal for you.
Ownership as an individual is tenant in severalty. A legal entity (trust, partnership, corporation, limited liability company, or REIT-Real Estate Investment Trust) may also take title as tenant in severalty.
When two or more people take title together to real estate in Colorado, they will have to decide what form of co-ownership to take: tenancy in common or joint tenancy. It is extremely important to understand the difference between the two types of co-ownership, especially as it relates to how ownership can be severed by one of the owners and what happens to the property if an owner becomes deceased.
Here are the three varieties further defined for your reference:
1. Tenant in severalty +
Defined as ownership of property vested in one person alone rather than held jointly with another, sometimes also identified as several tenancy or sole tenancy. The term is derived from the fact that a sole owner is severed or cut off from other owners. The severalty owner has sole rights to the ownership and sole discretion to sell, will, lease, or otherwise transfer a portion or all of the ownership rights to another person or entity.
2. Tenants in common +
Tenancy in common is presumed in Colorado law, unless joint tenancy is expressly stated in the deed. When two or more
people or entities (corporations, partnerships, LLCs, or trusts, for example) take title to real property as tenants in
common, each co-owner has an undivided interest in the property. This interest is “freely alienable,” meaning it can be
transferred by sale, gift, will, or inheritance.
In practice, this means that each co-owner has the “non-exclusive right to possession of the entire property.” At the same time, each co-owner also has the right to mortgage, sell, or otherwise transfer his own interest in the property without the consent of the other owners.
There can be any number of tenants in common, and their interests do not have to be equal; however all their combined interest must add up to 100%.
Severance of tenancy in common:
Upon the death of a co-owner, the deceased co-owner’s interest will pass to his or her heirs, based on that person’s will or Colorado State law of Intestate Succession. The probate requirements must be met, including the appointment of a personal representative and the recording of the personal representative’s deed conveying the interest of the deceased co-owner.
If a co-owner is an entity (a corporation, partnership, trust, LLC, etc.) and the entity terminates, the entity’s interest must be conveyed by a suitable deed executed by representatives of the entity in accordance with the state’s laws for that type of entity.
3. Joint tenants +
Joint tenancy can only be created if expressly stated in the deed by two or more people and is the right of survivorship. Upon the death of a joint tenant, the deceased interest transfers directly to the surviving joint tenant or tenants. The interests of joint tenants don’t have to be equal, but they still must add up to 100%. Joint tenancy can only be created between natural persons, not entities, for the obvious reason that the joint tenancy is terminated upon death of one of the joint tenants.
To create a co-ownership in joint tenancy, the instrument conveying the property must state that the property is conveyed to the grantees in joint tenancy or as joint tenants. This can be done using the phrase “as joint tenants with right of survivorship” or “in joint tenancy with right of survivorship,” or by using the abbreviation “JTWROS,” which stands for either of the two phrases.
Severance of a joint tenancy:
As in a tenancy in common, each joint tenant also has the right to mortgage, sell, or otherwise transfer his own interest in the property without the consent of other joint tenants. Doing so, however, may result in the severance of the joint tenancy.
On the death of any one of the joint tenants, the remaining joint tenants will continue to own the whole property, including the interest of the deceased joint tenant. There is no need for probate or any deed conveying the interest of the deceased joint tenant to the remaining joint tenants. The interest of the deceased joint tenant does not pass to their heirs (A death certificate and supplementary affidavit must be recorded in the county where the property is situated). The remaining joint tenants will acquire the interest of the deceased joint tenant free of all liens that may have attached to the interest of the deceased joint tenant.
A joint tenancy between two persons will be severed if one of the joint tenants conveys his interest to a third party. The remaining owner and the new owner will hold the property as tenants in common.
When property is held in joint tenancy by three or more joint tenants, a conveyance by one of them will destroy the joint tenancy only as to the grantor’s interest. The other remaining joint tenants will continue to hold property in joint tenancy between themselves, while the grantee holds his interest as a tenant in common with them.
If one of the joint tenants encumbers his interest, the joint tenancy continues. If the mortgage or deed of trust is foreclosed, or a judgment creditor forecloses on the judgment against one of the joint tenants, the grantee under a Public Trustee’s Deed or Sheriff’s Deed will acquire that interest as a tenant in common with the remaining joint tenants. The filing of a petition of bankruptcy by any joint tenant, however, will not automatically sever the joint tenancy.
For joint tenants who are married, the granting of a decree of divorce will automatically terminate the joint tenancy, and the former spouses will hold the property instead as tenants in common.
If one of the joint tenants in murdered by another joint tenant, the perpetrator cannot acquire the interest of the deceased joint tenant.
Tests for your new home - Be prepared and protect yourself
We strongly recommend protecting yourself during your purchasing process; plan on setting aside some money to investing in these tests after your purchase offer has been accepted. Think of these tests as inexpensive insurance against any expensive or unpleasant surprises once you own the property. Understanding if you have a problem or not will ease your mind as to the quality of the home you're purchasing, and if a problem is identified, an opportunity to have the problem(s) corrected by the owner or negotiated to where you're comfortable in possessing the property. These tests are very inexpensive in comparison to the potential costs to correct once you have possession of the property and are in your best interest to have complete before you own. There are several partners who can perform these services that we can refer you to, our partners can also quote, manage, and mitigate any issues they identify for you.
Home Inspections +
Any building, large or small, is essentially a group of complex engineering systems bundled together. Significant effort goes into designing and constructing structures with separate electrical and plumbing systems, heating and cooling components with their distribution systems, the foundation, walls, flooring, roof and so on to then perform as a single housing solution together. Due to the complexities of these variable systems by themselves and working as a cohesive unit, various things are bound to fail or not quite perform as originally intended over time. This is especially true if maintenance is ignored or put off over time, or if systems are abused or damaged over the lifetime of the structure. Perhaps the different systems and components interact with each other in ways unforeseen and in a negative fashion. Sometimes these problems are minor, and sometimes they can be significant costing hundreds or even thousands of dollars to correct. Worst of all, some minor problems can escalate into major problems if left uncorrected or remain unknown.
With a thorough property evaluation, you can find out what the “state of health” of the property you are thinking of buying is before you buy. Inspectors will check the roof, basement, heating system, water heater, cooling system, structure, plumbing, electrical, insulation, appliances, building interior and exterior, decks, and many other aspects of the structure. They look for improper building practices, those items that require extensive or minor repairs or maintenance, items that are general maintenance issues, as well as fire and safety issues. However, a home inspection is not technically exhaustive and does not imply that every defect will be discovered. This is the first best investment that you can take in purchasing your new home. This is where we will be first notified of any health and safety issues and potential large capital expenses that we can negotiate before you close.
For more information on the importance of a Home Inspection, please be sure to visit For Your Protection: Get a Home Inspection from the Department of Housing and Urban Development
Radon is a cancer-causing, naturally occurring radioactive gas that can’t be seen, smelled, or tasted.
Radon is estimated to cause many thousands of deaths each year due to breathing air containing radon, which can cause lung cancer. In fact, the Surgeon General has warned that radon is the second leading cause of lung cancer in the United States today. Only smoking causes more lung cancer deaths, if you smoke and your home has high radon levels, your risk of lung cancer is especially high.
Radon can be found all over the U.S. Radon is the result of the natural breakdown of radioactive elements in our soil, rocks and water; which then gets into the air we breathe. It can get into any type of building — homes, offices, and schools — and result in a high indoor radon level. You and your family are most likely to get your greatest exposure at home, where you spend most of your time.
You should certainly test for radon. Testing is the only way to know if you and your family are at risk from radon, and testing is inexpensive and easy. Contact us for referrals of companies that can complete a radon test for you.
You can fix a radon problem. Radon reduction systems work and they are not very costly, some radon reduction systems can reduce radon levels in your home by up to 99%. Even very high levels can be reduced to acceptable levels, contact us for referrals to companies that can mitigate high radon levels to below EPA approved levels.
How Does Radon Get Into Your Home? Radon is a radioactive gas, it comes from the natural decay of uranium that is found in nearly all soils. It typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation, radon from soil gas is generally the main cause of home radon problems. Your home traps radon inside, where it can build up; any home may have a radon problem. This means new and old homes, well-sealed and drafty homes, and homes with or without basements.
Sewer Scope +
Understanding the condition of the underground sewer drain line and knowing the extent and location of a particular problem will be a key part of your decision in purchasing a home. There are several defective conditions that may exist-even in newer homes and not just older homes with clay pipes- that you'll want to understand and have corrected before you purchase your home; otherwise significant out of pocket expense may be the result should one of these conditions exist in your home after closing.
Low Areas: also known as a 'belly', these low areas can collect water and solid waste, causing poor flow through the pipe and can lead to back-up and damage to the pipe as it sags further.
Offsets:on some older piping, sections in the piping can separate, causing an offset in the piping to occur. Solid waste may not clear this offset, and waste water will seep into the surrounding soil, causing further settlement and eventual breakdown of the piping.
Tree Roots:small gaps in sections of piping can allow tree roots to enter the sewer line. As the roots grow, the pipe can break and crack, requiring repair. Minor tree root intrusion can be rooted and cleared on a regular basis, with minimal or no significant pipe damage. Assessing the amount of root intrusion is part of a sewer scope inspection.
Pipe Collapse: if extreme root intrusion has occurred or significant soil settlement has occurred around the area due to offsets or a low area, complete pipe collapse can occur, requiring full excavation and repair of the sewer line. While rare, this condition can be assessed as part of a sewer scope inspection.
Debris:Occasionally construction debris or other items can become lodged in the sewer line, preventing the flow of waste through the pipe.
If your home was built before 1978, there is a good chance it may have lead-based paint. In 1978, the federal government banned consumer uses of lead-containing paint, but some states banned it even earlier. Lead from paint, including lead-contaminated dust, is one of the most common causes of lead poisoning. Lead paint is still present in millions of homes, sometimes under layers of newer paint. If the paint is in good shape, the lead paint is usually not a problem. Deteriorating lead-based paint (peeling, chipping, chalking, cracking, damaged, or damp) is a hazard and needs immediate attention from a certified professional.
Lead is a naturally occurring element found in small amounts in the earth's crust. While it has some beneficial uses, it can be toxic to humans and animals causing negative health effects. Lead can be found in all parts of our environment - air, soil, water, and even the inside our homes. Much of our exposure comes from human activities, such as the use of fossil fuels including past use of leaded gasoline, some types of industrial facilities, and past use of lead-based paint in homes. Lead and lead compounds have been used in a wide variety of products found in and around our homes, including paint, ceramics, pipes & plumbing materials, solders, gasoline, batteries, ammunition, and cosmetics. Lead may enter the environment from these past and current uses.
For more information, be sure to reference the Environmental Protection Agency's website for additional reference material, and be sure to review the EPA pamphlet Protect Your Family From Lead In Your Home.
Molds are part of the natural environment, and they are everywhere just waiting for the right conditions to thrive. Outside, molds play an important part in nature by breaking down dead organic matter such as fallen leaves and dead trees; they are vital to the natural decay process and are needed. Indoors is naturally quite another story where we all prefer that mold growth should be avoided.
Mold spores can lay dormant through extremely inhospitable conditions, all mold needs is a source of moisture and for food to exist within a wide temperature range (between about 40° and 115° F) and mold will begin to grow. Building materials provide a source of food for mold, when the moisture content reaches 19% mold will grow and reproduce by means of tiny spores. These spores are invisible to the naked eye and float through our air indoors and outdoors. Mold may begin growing indoors when mold spores land on surfaces that are wet. There are a wide variety of molds, and none of them will grow without moisture.
Molds are usually not a problem indoors, unless mold spores land on a wet or damp spot and begin growing. Colonies of mold will establish within 48 hours, so if you have water damage, or soaking of building materials, it must be cleaned and dried within 48 hours to avoid any potential mold issues. When the moisture is dried up or removed via a repair, mold will no longer grow. When moldy materials are damaged or disturbed, spores can be released back into the air where people, pets and air currents spread spores.
Molds have the potential to cause health problems, as spores-both dead and alive-can cause allergic reactions. Molds produce allergens (substances that can cause allergic reactions), irritants, and in some cases, potentially toxic substances (mycotoxins). Inhaling or touching mold or mold spores may cause allergic reactions in some sensitive individuals. Allergic responses include hay fever-type symptoms, such as sneezing, runny nose, red eyes, and skin rash (dermatitis), allergic reactions to mold are common. Allergic responses may be immediate or delayed, molds may also cause asthma attacks in people with asthma who are allergic to mold. In addition, mold exposure can irritate the eyes, skin, nose, throat, and lungs of both mold-allergic and non-allergic people. Symptoms other than the allergic and irritant types are not commonly reported as a result of inhaling mold, and research on mold and its health effects are current and ongoing.
For more information, be sure to reference the Environmental Protection Agency's website for additional reference material, and be sure to review the EPA pamphlet A Brief Guide to Mold, Moisture, and your Home.
Congratulations, you've purchased a new home! Now what, other than moving in and making this property your home? There're still some things to do after closing is completed with new keys in hand. The following are good ideas to review and have either completed or in motion to be completed right after possession of your new home:
- Rekey all entryway locks and re-program the keypad on the garage door opener if applicable. The only set of keys that you want available to open your new doors are the ones you are in possession of, not the ones that may or may not still be out in the general public. Rest easy and have them rekeyed and reset as soon as possible, especially if the property used to be a rental unit.
- Clean out the dryer vents and HVAC ducting. Generally those are the last parts of a house that are thought of to be cleaned, and who knows when the last time was when they were cleaned out, if ever. Clogged dryer vents are very common flashpoints for house fires, be sure the dryer when installed doesn’t have its ventilation pipe compromised by being squeezed partially shut. HVAC ducts can have all sorts of toys, dust and debris, construction material, pet hair, and even dead rodents in them, so having them cleaned is not only a good idea but an inexpensive idea as well. Some van mounted carpet cleaning companies not only clean carpets, but tile, shower stalls, HVAC and dryer vents also, so much can be accomplished with a single call.
- Have all your subscriptions changed over to your new mailing address, and be sure to complete the US Postal Service Change of Address form to insure you have uninterrupted mail service. Alert any insurance and financial institutions to reflect a change of address so bills and payments are not missed or sensitive financial data is not forwarded to an old address.
- Be sure to understand who services your utilities, television and internet, and garbage/recycling so they can be active and set up when closing is completed.
Frequently Asked Questions
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Q: When buying a new home, what upgrades should we consider? What holds the most value? Do we upgrade the lot? Do we increase the square footage? Add an extra bedroom?, etc.A:
A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
For the most part, upgrades are high-profit items for builders. They aren't designed to enhance the value of the house, but make you happier with the house you do buy.
If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.