In the last few years, the process of buying a home has been altered by the economy and the mortgage crisis and the continued evolution of online real estate tools. Buying a home should be an enjoyable and exciting experience. We invite you to contact us to set up a no-obligation “Buyers” consultation so that you can meet our team and we can discuss in person your specific needs and learn more about you and your search for your dream home.
Here we outline 12 steps to buying a home.
1. Check Your Credit
The most important activity in the home buying process in today’s market is to have a pre-qualification letter from a lender (see #2 below) before you do anything else.
Credit scores have always been important for home buyers and qualifying for a home loan, but they are more in the wake of the mortgage meltdown of 2007 – 2009. According to industry experts, home buyers in 2006 needed a credit score of at least 620 to qualify for the best interest rates on a loan. Now, borrowers needed a score of 760 or higher to get the best rates. That’s a much stricter requirement!
So your first step should be to review your financial situation. Order your credit reports from Experian, Equifax and TransUnion, and check them for errors. Order your credit score (different from your reports) to see how you stack up against the national average. If necessary, focus on improving your score by paying down credit card balances, making all future payments on time, etc.
If you want to get a “quick check” of your credit score for free, we recommend www.creditkarma.com. This is a free website, with many tools to manage your credit. Credit Karma provides your TransUnion score for free.
2. Get Pre-Approved for a Loan
Pre-approval is a process in which the mortgage lender reviews your financial and credit history to determine your “creditworthiness” an industry term that means: “How much of a risk is this person, and how much are we comfortable lending?” When you get pre-approved for a certain loan amount, there’s a good chance that you’ll receive final approval for that amount as well, when the time comes.
Having a pre-approval letter in hand is mandatory when making an offer on a home in today’s real estate market. Inventory and interest rates are low and sellers will want to know if a buyer is qualified before accepting an offer.
3. Determine Your Budget
Don’t make the mistake of letting a mortgage lender tell you what you can and cannot afford, in terms of a monthly mortgage payment. In reality, the only thing a lender can tell you is the amount you qualify for – not the amount you can realistically afford. In other words, you should determine your home buying budget for yourself. There are a lot of free mortgage calculators online that can make this process easier for you. Your monthly home payment will include your mortgage payment (principal and interest), your property tax, home insurance, mortgage insurance (if non-conventional loan), and HOA fees if buying a condo or a home in a Planned Development.
4. Research and Choose a Type of Mortgage
Do you know the difference between a fixed-rate mortgage and an ARM? How about a conventional loan versus and FHA load? These are just a few of the things you need to understand before applying for a mortgage loan. Because of increased competition in the lending industry, there are more types of home loans today than ten years ago. The key to success when choosing a mortgage is to consider your long-term plans and find a loan that matches those plans. To do this, you must learn the pros and cons of the primary loan types.
5. Using the experience of a trusted REALTOR.
The Nahin Team has represented many buyers and sellers in Coastal Orange County real estate transactions. In the past 4 years they’ve averaged over $20 Million in sales. They are committed to their profession as REALTORS and they pride themselves on exceeding their clients expectations. Their #1 priority is you the client and hope they can earn your business.
6. Narrow Your Search
The neighborhood you choose is nearly as important as the house itself, because both have a direct bearing on your quality of life – not to mention the future resale value. We specialize and have represented both buyers and sellers in Newport Beach, Corona del Mar, Newport Coast, Costa Mesa and other coastal Orange County communities and neighborhoods. Use our advanced search option to search for specific areas or subdivisions. You can also sign up for our FREE “My Listings Manager” where you can save search requirements, save property profiles, and have new properties emailed to you as they come on the market.
7. Begin House Hunting
This is where we visit properties in order to find one that matches your needs. Here are some helpful tips. Take a digital camera with you to get pictures of each home. This will help you recall the details later on. Bring a notepad as well, and for the same reason. While you’re at it, you might want to bring a friend along for an unbiased opinion of each property – you know, that outspoken friend who calls it like it is.
8. Evaluate the Asking Price
It’s referred to as the “asking price” for a good reason. Just because a property is listed at $1.75 Million, doesn’t necessarily mean it’s worth that amount. This is another area where it helps to have a knowledgeable real estate agent. We are expert at validating sale prices against recent sales in the area, and that’s the best way to find out if the price is realistic or inflated.
9. Make an Offer
Once you’ve determined that the price is fair and reasonable, you are ready to make an offer on the property. Always make the offer contingent upon the pest and home inspection. That way, if the inspector uncovers an issue that you consider a deal breaker, you have a way out of the contract. Or we can write an addendum asking the seller make repairs before close of escrow.
10. Get a Home Inspection
Most inspections only cost a few hundred dollars. That’s a small price to pay for the peace of mind you get in return. A pest and home inspector will review the structural and mechanical aspects of the house, including (but not limited to) the roof, foundation, electrical, and heating / cooling system.
11. Attend the Closing / Settlement Process
So, you’ve made it through all of the inspections and the process is still on track. Great! The next step will be the closing / settlement process. Actually, you can prepare for this process early on by putting extra money aside. This is when the title to the property is transferred from the seller to the buyer. You’ll also be signing a lot of paperwork and paying any other fees that are due.
12. Tie Up Loose Ends
After your move, you’ll have a few more things on your task list. Transfer your utilities if you haven’t done so already. Complete a change-of-address form with the post office. Get a safe deposit box for your home insurance policy and other important documents. Set up a mortgage payment schedule or an online auto-pay system. And give yourself a pat on the back … you’re now a homeowner!
If you have any questions about buying real estate please call us at 714-269-7851.