BUY YOUR DREAM HOME WITH CONFIDENCE

So, you're ready to buy a house—what now?

A first home purchase is an emotional, exciting, and stressful experience. You might wonder, "What am I missing?" This is a common question.

The Buying Process Works From Start to Finish

• First Step: KNOW Your Credit! Pull Your Credit Through Experian.com or Credit Karma. Pulling your credit does not affect your score. You will be able to see if there are any errors and or issues you were unaware of and correct them. You will also see your debt in the eyes of the lender.  
• Do Some Preliminary Online Searching. Check what homes are selling for in the areas you’re interested in to give you an idea of what you’re looking for. This will help when you later communicate your wish list to your real estate agent.
• Take Care of the Budget. Use an online mortgage calculator to determine your monthly mortgage payment if you were to purchase one of these homes you’ve found online. Make some additional estimates for utilities and see if this fits into your budget. Write out or use an online budget tool like Mint.com. Knowing your budget will help you determine the mortgage you will be comfortable with. Experts say no more than 28% of your gross income should go towards housing costs. A reasonable frame of thought, even though I do not believe I had this ratio when purchasing our first three homes 😊. 
• Get Pre-approved. To get pre-approved for a mortgage, you’ll need to get some paperwork ready: pay stubs, W-2s, bank account statements, tax returns for the past two years, credit lines, and names and addresses of your landlords for the past two years. Start with your current bank, but check out competitor banks as well – you might get a better mortgage loan rate by shopping around. Also, consider the amount your lender approves you for as a maximum – this is by no means what you should spend. I prefer credit unions and ARMs; having worked at SDCCU for over 13 years as a mortgage loan officer, I can help guide you through the process.  
• Find an Agent. An excellent real estate agent will help you navigate the process every step of the way. Your friends and family will be great sources—see if any of your trusted contacts have someone they recommend.  Once you find the REALTOR® you'd like to work with, you will need to sign a buyer representation agreement. This agreement outlines the REALTOR®'s services, client expectations, and an agreed-upon compensation amount or rate for your REALTOR®
• New NAR Rules require all REALTORs to provide a Buyer Representation Agreement (C.A.R. Form BRBC) before showing any homes. It can indicate exclusive and nonexclusive; the maximum time is three months, and you can indicate specific addresses or all showings. Most importantly! Please indicate by checking the agreement if you need or want the seller to compensate your agent for "always negotiable" commissions.

• Look at Homes. Be patient at this stage. Your real estate agent may show you various homes to get your reaction on features they think you’ll like. Give your agent detailed feedback so they can show you homes ideally suited to you. Sometimes, this process can take months or years—So be patient. Also, make sure you let friends and family know you’re looking for a new home--you may even find out about a fantastic home before it hits the market
• Make an offer. You may want to move quickly once you’ve found your dream home. Your agent will guide you on a reasonable first offer to start negotiations based on market conditions. Also, consider closing costs, which could account for 2-5% of the home price.
• Negotiate. Prepare to discuss price and selling conditions with the seller a few times. Your real estate agent will be your advocate and try to get you, their client, as much as possible for your money while being fair and respectful to the seller and their agent.
• An Accepted Offer. Pop the champagne! If you reach an agreement, you’ll wire a deposit to an escrow account to show good faith. Escrow is usually 21 - 30 days when the seller takes the house off the market with the contractual expectation that you’ll purchase the home - provided you don’t find any serious problems during the inspection.
• Do a Home Inspection. Even if the home appears flawless, there’s no substitute for having a professional inspector review the property for your potential home's quality, safety, and general condition. You don’t want to be surprised with a house that needs a lot of unexpected repairs. If the inspection reveals undisclosed severe defects, you can negotiate further to have the seller make repairs or discount the selling price. You’ll also likely be able to withdraw your offer and get your deposit money back.
• Closing. When your negotiations with the seller are successful, the inspection comes back, and you have negotiated any necessary repairs or credits, you should be ready to close. At closing, you’ll sign lots of escrow, title, and loan paperwork; your lender will fund once the documents are reviewed. The title company will send the deed for recording at the county, and once recorded; your agent will set up a time to give you your keys! 

Additional Resources:

To Learn About Mortgages, visit: https://www.consumerfinance.gov/know-before-you-owe/

Downpayment Assistance Resources:

San Diego Housing Commission: https://sdhc.org/housing-opportunities/first-time-homebuyers/

California Housing Finance Agency: https://www.calhfa.ca.gov/dream/