Here is an in-depth home buyer guide for you
Before you make offers, here are some key things to consider:
- Don’t buy based on approved loan amount alone. Focus on a comfortable monthly payment.
- Identify your 5 “MUST-HAVES” in a home and prioritize them.
- Research the area for taxes, HOAs, and Mello Roos (impacting monthly payments).
- Expect to stay in your home for 7 years on average. Choose accordingly.
- Pool homes are highly sought-after. Consider potential maintenance costs.
- Factor in drive times, especially in California traffic.
- Expect a mix of excitement and stress during the buying process. Find a supportive agent.
Ready to take action? Here’s an overview:
1. Credit Reports & Scores:
- Ensure no errors exist. Clear debts and negative hits.
- Verify reports with Equifax, Experian, and TransUnion.
2. Contact a Trusted Real Estate Agent:
- Get 2-3 mortgage lender referrals. Assess responsiveness, knowledge, and helpfulness.
- The chosen lender will conduct a “hard pull” on your credit report for loan terms and rates.
- Address common issues like debt, low credit score, and down payment concerns early.
3. Research & Choose a Loan Type:
- Understand different loan options and PMI (private mortgage insurance).
- Choose a monthly payment you can comfortably afford, not just what you’re approved for.
4. Find the Right Real Estate Agent:
- Seek an agent with local knowledge, expertise in your loan type, and excellent communication.
- Treat your agent with respect and honesty for a smooth collaboration.
5. Understanding People in the Transaction:
- Realtors: Verify licenses and no violations. Check the California Department of Real Estate.
- Agents: Usually one each for buyer and seller. Dual agency has potential conflicts.
- Title Officer: Selected by seller, usually. Ensures a clear property title.
- Escrow Officer: Impartial third party handling documents, funds, and deadlines.
- Appraiser: Crucial for determining value and avoiding appraisal-related issues.
- Mortgage Lender: Ensure their communication, speed, and efficient work.
6. Buying Process & Timeline:
- Get pre-approved for a loan.
- Tour properties and find your dream home.
- Submit a timely offer and negotiate as needed.
- Open escrow and submit earnest money deposit.
- Conduct inspections and address contingencies within allotted timeframes.
- Sign loan documents and finalize closing funds.
- Close escrow, receive the keys, and celebrate!
7. Taxes, HOAs, and Mello Roos:
- Be aware of potential impacts on your buying power and monthly payments. Newer homes typically have higher taxes and HOAs.
8. Don’ts During the Home Buying Process:
- Hide financial details from lenders. Honesty is crucial.
- Make major purchases until after closing. Wait for financial stability.
- Quit your job while buying a house. Maintain financial security.
- Overspend before closing. Save as much as possible.
9. Offer Accepted! Now What?
- Sign contracts, wire earnest money, and set due date reminders.
- Order inspections and appraisals. Review reports and request repairs if needed.
- Oversee repair completion by licensed professionals as required.
10. The Loan Process:
- Provide requested information for a solid pre-approval and fast processing.
- Expect initial waiting for appraisal and supporting documentation.
- Understand underwriting and its timelines (48 hours max).
- Sign loan documents and wait for funding (usually 2-3 days).
11. Escrow Explained:
- Escrow acts as a neutral third party handling transactions securely.
12. Holding Title:
- Consult a title officer or representative for various holding options and their implications.
13. Title Insurance:
- Protects both buyer and lender from property ownership issues.
14. Names on Title vs. Contract:
- Verify accuracy with plat maps and address matches.
- Address easements and involve escrow/title for problem solving.
15. The Home Stretch:
- Ensure timely paperwork completion and lender readiness.
- Conduct a final walkthrough to verify repairs and no changes from the offer.
- Secure movers, utilities, and closing statement review.
- Confirm home warranty (if requested) and celebrate with a welcome drink!