A home is probably the biggest financial investment you’ll make in your life. Before you get started, do some homework. This handy Buyer’s Guide will show you some things to keep in mind as you’re hunting for that home of your dreams.
1. Determine How Much You Can Afford
How much house you can afford is largely dependent on how large a mortgage – basically, a home loan -- you can handle. Start your research by using the simple mortgage calculators I have on my website to see whether you can afford to pay the monthly mortgage on the kinds of houses you have in mind.
Even better, speak with a local lender, so you can get loan advice that is tailored individually to you. Please let me know if you'd like me to direct you to a lender with the most competitive rates.
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Payments you may have to make when you submit an offer and at closing include:
Earnest money, also called a Good Faith Deposit, is usually 1% to 5% of the cost of the house, and you would pay this at the time you submit your offer. It’s your proof that you’re a serious buyer. The amount you pay will be deducted from your down payment. You pay the remainder of the down payment a few days before you close the transaction. If you are doing a 0-down loan, you will receive all of your earnest money back. Your up-front payments are: earnest money, credit report, home appraisal, and home inspector fees. The following costs are paid just before the closing.
Mortgage insurance, paid by borrowers making a down payment of less than 20%.
Closing costs, usually 3% to 4% of the cost of the house, to pay for processing all the paperwork
One cost you will NOT have: I do not charge a commission to you, the buyer, for my real estate services.
2. Shop for a Home
House hunting can be both exciting and frustrating. To make the search easier and faster, nearly half of all house hunters today begin by browsing for properties on the Internet, using web sites like this one. Please go to my home page and click on the "Search For Homes" link and you will have access to the same data as Realtors in the areas from Burbank to Santa Clarita to Thousand Oaks in Los Angeles County. Property information is updated every day, unlike most other real estate web sites.
The Internet is a quick way to see whether the houses that are currently available meet the following critical criteria: in the right location, with the right features, and at the right price. If you find after your search on my website that few properties meet with your expectations, you may want to readjust your criteria – change the location, features, price – to increase your chances of finding a house that works for you. If you have any difficulties in this initial search, feel free to contact me for assistance. I can do a more personalized search for you. I am always the most current resource for literally up-to-the-minute new home listing information. Also, I also have access to homes that are not yet on the market. Call me so you can see these homes before the general public does.
Once you know what you want, where you want it and what you can afford, it’s time to see the houses for yourself. To help stay focused, bring with you a checklist of things that you’ve decided ahead of time are important qualities of your future home.
This might include:
Is there enough room for you to grow in?
Is the house in move-in condition or, if not, what kind of work will it need?
Is the property close enough to everyday needs, such as grocery stores, schools, your job?
Will you feel safe here?
Is the yard the right size for your needs?
Do you like the floor plan?
Is there enough storage?
Will you be happy in this house in winter, summer, spring, fall?
3. Find a Real Estate Professional...That's where I come in...
SECRET LISTINGS - A professional Realtor has access to a network of contacts and can draw from extensive market knowledge to help pinpoint the right house for you quickly. Best of all, I have access to "secret listings" of homes that are not, and may never be, listed in the multiple listing database. This means you have the edge in seeing a home before other buyers even know they exist. I will show you homes that are listed by the various real estate companies, not just my own listings. As we look at homes, I can explain the advantages and disadvantages of each property you see, according to your individual needs. When you find the home you want, I can help you write a solid contract that is to your best advantage. I want to help you get the best home, at the best price.
DISCLOSURES AND COMMUNICATION - After you and the seller agree on terms, I can make sure you'll receive all of the required seller disclosures, and assist you in hiring a competent home inspector of your choice to determine any serious drawbacks to the property. We'll work together to request any necessary repairs of the seller. Plus during the process I stay in contact with you, your lender, the escrow company, the seller's agent and others, to make sure everyone is on track with making your transaction a smooth one.
NEED AN ALLY? - If you have problems or concerns during the process, I will be your ally. I've been licensed since 1990 so I have plenty of experience -- but not too big an ego. This means that if I don't know an answer to a question you have, I promise not to guess but will find out the answer for you. I mean what my slogan says: "I'm not #1 -- YOU are."
4. Research Different Mortgages
There are a variety of mortgage types available today, each with advantages and disadvantages depending on how long you plan to live in the home, the financial marketplace and your income potential, among other things.
A fixed-rate mortgage is the most common. In a fixed-rate mortgage, your interest rate and payment stay the same for the life of the loan.
An adjustable-rate mortgage usually starts out at lower interest rates and lower monthly payments than fixed-rate mortgages, but your rate and monthly payments may rise and fall based on a financial index.
There are also several government mortgage programs available, including FHA mortgages, which are designed to help people who might not otherwise qualify for a loan.
You may also have a choice in loan terms. There are 30-year loans and 15-year loans. There's even a new 50-year loan. Zero-down payment loans are available for those who qualify, to minimize your out-of-pocket expenses. The interest rates are a bit higher on these loans.
LOOKING FOR A GREAT LENDER? - I may refer you to a Mortgage Broker that can discuss current market financing packages and provide a FREE Loan Qualification.
5. Make an Offer
When you’ve found a house you really want, it’s time to make the offer. How much you offer may depend on a number of factors:
Is the asking price fair? Here’s where the legwork you put in while shopping for a home pays off. Decide whether this house is priced right, or out of line in the current marketplace.
Will this house need a lot of work? Take costs of improvement into consideration when deciding your offer price.
Has it been on the market long? Usually the longer a house has been on the market, the more likely it is the owner would accept a lower offer, unless the seller has recently reduced the price drastically. Or maybe it’s just overpriced for the market.
Is it a seller’s or buyer’s market? If the houses you’re interested in are being bought as soon as they’re listed, that means you’ve got a lot of competition from other buyers; offer accordingly. If houses aren’t selling fast, you may have more leverage in negotiating a lower price.
Once you’ve determined how much you’d like to offer, work with me, your real estate professional, to submit the proper information. This includes:
This can be just the beginning of the negotiation process. The seller has three options: accept your offer, counter your offer or reject your offer. Let me advise you on the best way to present your offer for a good outcome.
A complete, legal description of the house
The amount of earnest money you’re paying
The down payment and financing details
A proposed move-in date
The price you’re offering
A proposed closing date
The length of time your offer is valid
Details of the deal
6. Begin Contingency Period
When your offer has been accepted, the contingency period begins. This is time that allows you to obtain financing, perform inspections and satisfy any other contingencies of your purchase agreement.
Obtaining financing might include loan approval, which will include an appraisal of the property. Also be prepared to make your down payment, which is usually due several days before the close of escrow.
Now is the time to schedule a professional inspection of the property; it is one of the best safeguards you can take before buying. A home inspector should check the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, water source and quality, foundation, doors, windows, ceilings, walls, floors and roof.
Keep in mind that the inspector isn’t there to tell you whether you’re getting a good deal. He or she is there to give you an educated opinion on whether the house is structurally and mechanically sound and fill you in on any repairs that are needed.
7. Buy Homeowner’s Insurance
A paid homeowner’s insurance policy is required at closing. I will help make sure your insurance company and your title officer are working together to put your policy in effect by the close of escrow. But, if you get your insurance agent involved early in your home-buying process, he or she may also help point out ways to help keep your insurance premiums lower.
8. Complete Settlement or Closing
When the property you’re buying has been inspected and you’ve had your final walk-through of the property to see that all contingency conditions – such as final repairs made by the seller -- have been met, it’s time to face the paperwork. You will be signing loan documents and closing papers, paying the balance of your down payment and closing costs. Usually within a few days of this, you will get the keys to your new home. Congratulations!
Feel free to contact me any time if I can be of any service!