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Is now the time to buy?

Depending on your circumstances the current market could be a golden opportunity. Prices are at a historic low and many homes have the potential to build equity quickly. First time home buyers have more financing options than ever before. In the Denver area the Colorado Housing and Finance Authority (CHFA) offers programs for first time home buyers including low interest down payment assistance. There are many programs and grants that you may qualify for as well. Federal tax breaks can also make it very attractive to purchase a property in foreclosure.

Did you know?

Lenders – Buyers have the right to choose any mortgage lender they wish when financing a real estate purchase. In many foreclosure situations the lender will dictate that you be prequalified with them before you submit an offer to purchase one of their foreclosed properties. Being prequalified with that lender doesn’t mean you have to use them for financing. You can still choose whatever bank or mortgage lender you’d like to use. Also, real estate agents cannot dictate that you use a particular lender as a condition of a sale. It’s your choice.

Title Insurance – You are not required to purchase title insurance when purchasing Colorado properties but nearly all institutional lenders will require it. Even if you don’t finance a property a title insurance policy can be invaluable. This insurance protects against financial loss from defects in title to real property and from the invalidity or unenforceability of prior mortgage liens. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. Prices for title insurance vary by company. Some title insurance companies have gone bankrupt in the recent economic downturn. Not to worry. Most title insurance companies are simply agents for title insurers who actually issue the policy. As long as the title insurer who issues the policy is financially strong you have nothing to worry about.

Surveys – A survey can be conducted on any property but is customarily only done on properties outside metropolitan areas that have a legal description using metes and bounds. Survey costs average between $1,000 and $2,000 depending on location and size of the parcel. Inside the city limits most properties use “lot and block” legal descriptions. That means the parcel is part of a subdivision which has already been surveyed when the development was first constructed. If a parcel has a legal description using “lot and block” it’s a good idea to purchase an improvement location certificate. This is an abbreviated survey that will identify any encroachments on the parcel such as a neighbor’s privacy fence or driveway constructed on the parcel you wish to purchase. Title insurance companies may require either a survey or improvement location certificate prior to issuing a title insurance policy since they are insuring against such encroachments.

Assessed Values - The assessed value of a property determines the tax that an owner is required to pay on the value of the property being taxed. Taxes are generally based on a millage rate or mill levy. A mill is one-thousandth of a currency unit. To calculate the property tax, the taxing authority will multiply the assessed value of the property by the mill rate and then divide by 1,000. For example, a property with an assessed value of $250,000 located in a municipality with a mill rate of 5 mills would have a property tax bill of $1,250. Assessed values are updated by municipalities periodically and are based partly upon values per square foot for similar properties in your area. Values are adjusted for items such as outdoor improvements, home additions and remodeling. Assessed values are generally lower than actual market value.