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In a perfect world, owing a home gives you both a
great place to live as well as providing an
asset that gains value over the time that you
own it.
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The
stress of trying to make the right decision when
it comes to a home purchase can get overwhelming;
it's important to follow certain steps that will
help make your home ownership dreams come true.
Talk to a loan specialist at your bank or credit
union; find a person who understands your concerns
as a first-time home buyer. Find a person and institution
that will not only give you a complete assessment
of how much home you can afford, but what hidden
costs are part of the transaction as well. Note
the difference between pre-approval and pre-qualification.
Pre-approval means you’ve completed the loan
application process and have the funds ready to
spend.
Research the areas you think you’d like to
live in and the price of homes there; you can do
this while you’re waiting for home loan approval.
When you’re armed with this information,
you can better direct your search by eliminating
homes/areas that are out of your price range. You
made need to make concessions based on what you
discover; to afford a desired neighborhood you
may have to look at a smaller home with fewer amenities.
It is important to work with someone who can explain
local sales, trends and particulars about your
desired area. If you have a young family, information
about local schools is especially important. Also,
it pays to work with an agent who’s commitment
to the area you’ve chosen is obvious.
It
is helpful to find an agent who specializes in
first-time buyers; an agent who can help explain
procedures and is sensitive to your concerns. Remember:
it is the seller who pays the agents’ commission,
so don’t select someone based on how cheap
they are!
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As you become familiar with prices
in the area you’ve chosen,
make a list of things you NEED in a home versus things you WANT in a
home. Once you know what you can and can’t live without, don’t
waste time looking at properties that don’t fit your description.
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Don’t like the green shag carpeting
in the den, or the pink paisley bathroom wallpaper?
Remember, these types of decoration and light structural
oddities can be changed. Consider if the home you
are looking at has a good floor plan and a good
location; those attributes are harder to change.
If you are considering a condominium or home in
a structured community, read a copy of the HOA
rules. Several newer home tracts have CC&R’s,
or Conditions, Covenants and Restrictions that forbid certain things
like owning motorcycles, or place limits on what type of color you
can paint your home. Ask your agent if they are familiar with the
reputation of the HOA; ask current owners if they are happy with
the HOA.
Property Taxes, Home Maintenance, Repair, Insurance
and Home Owner’s
Association dues all add up. Property taxes are usually somewhere around
1.25% of a home’s assessed value, meaning the tax burden on a
$400,000 home will be about $5,000 the year after you buy the home.
Future repairs should also be budgeted for (roof repair, new air conditioner,
etc.).
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Although many first-time buyers can qualify for more than they
need, a larger mortgage may be more than you can comfortable afford.
Work
with your lender on a loan for an amount you can REALISTICALLY afford,
one that takes into account the monthly mortgage, fees, taxes, and
insurance costs. |
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Keep in mind the fact that if you are stretched
too thin financially, you will not be able to afford landscaping,
window coverings, unexpected repairs, etc.
Work with your agent to have an “inspection contingency” written
in to your deal, allowing you at least a three-day grace period when
you make a purchase offer. During this grace period, you can have major
components of the house looked at by YOUR inspector, review the report,
and adjust your offer if necessary.
You can even cancel your purchase
contract without penalty. Private inspections can turn up problems
or concerns that could affect your purchase decision; be sure to budget
for this type of service.
Obtaining homeowner’s insurance, having your home loan funded,
doing the final walk-trough on your home, signing piles of closing
documents and handing over a large cashier’s check for the final
loan costs: these are just SOME of the elements of completing your
home purchase.
Working with professionals you trust can help smooth
out this process, but it is recommended that you read up on the home-buyer/closing
process ahead of time, to eliminate as many “surprises” as
possible.
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1215
Lions Peak Ln.
San Martin, CA 95046
  
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