My Buyers' Plan
Buying a new home is exciting and daunting at the same time. In concept, the process is relatively easy. Find a home, make an offer, and go to escrow. In reality, buying a home involves contract contingencies, home inspections, addenda, reports, disclosures, comparative market analysis, financing, and numerous forms that many first time home buyers and some seasoned buyers find confusing and overwhelming. Download a free Buyer’s Guide.
As a certified first-time buyer specialist, I will help first-time buyers and seasoned buyers break down the complexity of the process and explain the forms and requirements needed during each phase. I will simplify the buying process to fit your needs depending on whether you are buying your first home, your next home, or investment property.
Pre-Quality with the Lender
Contrary to what most people think and do, the first step of buying a new home is meeting with a lender and not going to open houses. The main reasons to get pre-qualified first are to know what you can afford to pay for a house, your monthly payments, and the amount of money you will need. Next, we need to define your priorities and be realistic with your needs and wants because we might not find everything within your price range. Once you know exactly want you can afford and have defined your “must-haves”, then I will handle the rest.
Home Shopping and the Rest
Once you have the pre-approval letter from the lender, then you’re ready for the fun part of buying a new home. Home shopping. Once you identify the homes you would like to see in person, I’ll make all the arrangements to make sure you can see those homes safely. Then, after you find a new home that you love, I will write the offer and help you negotiate the price. When escrow is opened, I will help you navigate the entire process from the day we open escrow to the day you get your keys and everything in between. I will work with you every step of the way to explain what to expect for each milestone.
What to Expect From Me
The Internet and real estate professionals are the top two resources most buyers turn to when searching for a home. I can help improve your overall home buying experience and provide guidance to reduce stress, save time, and make you a savvy, successful consumer.
I’m ready to make a full-time commitment to help you capitalize on current market opportunities and assist you in making an informed decision.
To ensure you make the right choice for the long term, I can offer extensive knowledge in:
- Neighborhoods, schools, and market conditions
- Mortgage specialists who can assist you with your financing
- Technology that gives me an edge, along with multiple resources available.
Would you like to receive more information on the home buying process? Contact me.
Home Buying Explained
Lifestyle, Housing Needs & Budget
Before deciding which house to buy, consider your lifestyle, current, and anticipated housing needs, and budget. It’s a good idea to create a prioritized list of features you want in your new home; you’ll quickly discover finding the right house involves striking a balance between your “must-haves” and your “nice-to-haves.”
Love to cook? You’ll appreciate a well-equipped kitchen. If you’re into gardening, you’ll want a yard. Working from home? You’ll need a room that will provide you adequate workspace. If you have several cars, you may require a larger garage. Use this list as your search guide.
Future Needs, Duration of Stay & Location
Next, think about what you might need in the future, and how long you are likely to live in this particular home. If you’re newly married, you might not be concerned with a school district right now, but you could be in a few years. If you have aging parents, you may want to look at homes that offer living arrangements that could accommodate them as well.
It’s important to think about your new home’s location just as carefully as its features. In addition to considering the distance to work, evaluate what matters to you in terms of services, convenience, and accessibility, such as shopping, police and fire protection, medical facilities, school and daycare, traffic and parking, trash and garbage collection, even recreational facilities.
Let me Know
Talk to me about where you want to live and what’s most important to you. While buyers frequently use the Internet to gain access to listings or available properties for sale, I bring value to the entire home buying process. I’m available to analyze data, answer questions, share my professional expertise, and handle all the paperwork and legwork that is involved in any real estate transaction. I can help you narrow your choices by sharing market trends and local information.
TIP: It’s also important to consider the type of home that suits you best. Your options might be limited due to your budget. Is it a condominium or a co-op? A townhouse or detached single-family home? Do you want brick, stone, stucco, wood, vinyl siding, or something else? Do you prefer a new home or an older one?
Get Pre-ApprovalEarly in the process, you’ll want to get pre-preapproval for a mortgage loan. It enables you to move swiftly when you find the right home, especially when there are other interested buyers. It also indicates to the seller that you are serious and can afford to buy the property. A pre-approval is a simple calculation done by a mortgage lender that tells you the amount you’ll be able to finance through a loan and what your monthly payment will be.
Documentation for Pre-approvalMost lenders will need the following items to get the pre-approval letter:
- 2019 and 2020 W2s
- 30 days pay stubs
- Recent bank statements
Criteria for Pre-ApprovalThe price you can afford to pay for a home will depend on several factors, such as:
- Gross income
- The funds you have available for the down payment, closing costs and cash reserves required by the lender
- Your debt
- Your credit history
- The type of mortgage you select
- Current interest rates
Check out the Neighborhood
Evaluating a neighborhood and surrounding areas thoroughly is essential.When you buy a home, you’re investing in a community. You’ll spend a significant amount of time and money supporting the schools, community organizations and commercial centers in the area. Before you make the final decision, take a good look at the location and make sure it fits your lifestyle. For example:
- Evaluate the property’s proximity to other important locations in your life. How long will your commute time be? Is there a hospital or doctor’s office nearby? What about schools, childcare, shopping, family and friends?
- Consider all of your transportation options. A new home could lend itself to public transportation options or carpooling. Depending on the type of community, you may be able to find alternative methods of transportation. Take the time to drive from the new home to your commuting destinations, to get a sense of what your daily life will be like.
- Make sure you feel comfortable in the area. Drive around the neighborhood at different times of the day and night on multiple days of the week to observe activity and noise levels. An educated buyer is a happy one!
How I Can Help
I can be a tremendous resource. Ask me for a list of schools, shopping centers, parks, or other amenities that are important to you. Buying a new home is about more than the structure and property. It’s about your new lifestyle as well.
TIP: Visit and understand the school district. Even if you don’t have children in the school system now, you may someday. The district’s reputation could positively or negatively impact the selling price of your future home as well.
Buying a new home and selling an existing home at the same time has its own set of challenges. And with knowledgeable planning, you can ensure everything goes smoothly.
Do Your Homework
Before putting your house on the market or committing to buying a new one, first, take a look at the prices of houses in the areas where you’ll be selling and buying. You’ll need a realistic idea of sales prices for similar houses, so you can assess both your buying and selling position.
What Type of Sale
Then, decide what type of sale will it be. Will you buy, move into your new home and then sell? This would be the most relaxing option if you can afford it. Or will you do a contingent sell? This means that you are selling your home contingent on finding the replacement home and having both escrows close roughly at the same time. This option is the most challenging and stressful transaction.
What if you’re unable to time the sale of one house with the purchase of another? You may own no houses for a time, in which case you’ll need money in the bank and a temporary place to live. Or, you may own two houses at once. That’s why it’s important to have a backup plan. Here are some options to consider:
- Research short-term rental and storage options (family, friends, storage facilities, containers).
- Bridge financing (a short-term loan) for the down payment on a new home backed by the equity in your old house.
Buying a Second Home
Buying a second home isn’t all that different from buying your first home. Similarly, your ability to qualify for a second mortgage depends on the loan qualification. Benefits for having a second home include a vacation home, a future retirement home, or a rental home.
Certainly, if you declare it as a rental, your mortgage might be slightly higher and your down payment requirements higher than a standard mortgage. More importantly, work with your lender to create a customized loan program with the best combination of rate, points, and closing costs to meet your needs.
TIP: A second home can be a good investment. To make the most of the opportunity, be sure you factor in sources for your down payment and monthly expenses (including the costs of maintaining the property).
I can help you find out what other homes have sold for in the area, and how much money you might have to put into repairs or renovations. These considerations should be a factor along with the amount you’re comfortable spending. As important is to know what you are competing against. In a sellers’ market, normally you have a bidding war. I’ll contact the listing agent to gather as much information as possible. For instance, how many offers they have, a general price for the offers and factors that are important to the sellers.
Keep in Mind
In addition to the sale prices of other comparable homes and information gathering, there are several ways you can come up with a winning bid. For example:
- The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs real work?
- The market. If you are in a buyer’s market — where there are more homes for sale than there are people to buy them — prices are probably stable or falling. If you are in a seller’s market — where there are more buyers looking for homes than there are homes for sale — prices are probably moving upward.
- Your ceiling. If you have a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you’ve been approved to borrow, so think carefully about your financial situation before making an offer.
Next, decide how much you are willing to pay for a home. Remember, the advertised price of a house is just a starting point – it may take quite a bit of negotiating to arrive at a final cost.
TIP: The value or disadvantage of certain features can help or hurt resale. In some areas, a swimming pool actually detracts from a home’s value and makes it harder to sell. In neighborhoods with two-car, attached garages, a single-car or detached garage may affect the home sale and future value.
Once you’ve made the decision to become a homeowner and picked the house, most likely you’ll need to apply for a loan. This process might seem daunting, but your lender will guide you through it. The process will be even easier if you know what to expect and prepare for it.
Here are the high-level loan application steps:
- Prepare required documents:
- Two years of employment history, current employment status and salary are needed. Employment letters can be used to explain gaps in employment.
- Two years of W-2s (this does not apply if self-employed) and tax returns allow the lender to be sure that your salary is high enough to make the mortgage payments every month.
- Most recent pay stubs for the last 30 days tell the lender that you’re still earning money similar to the amount on your tax returns. (This does not apply if self-employed, but the lender will likely require a profit and loss statement.)
- List of assets, including bank statements, let the lender know that you have the money to cover the down payment, closing costs and a reasonable emergency.
- Submit the application. Once you’ve prepared the required documents, the first step with the lender is to apply for the home loan. Of course, you will need to provide personal information, as well as information about the property you’ll be purchasing, such as the address and estimated purchase price.
- Provide your documents. Submit your documents, such as pay stubs, W-2s, bank statements and employment history. Tip: Did you know that some lenders, allow you to provide your required documents digitally, even uploading directly from your mobile device?
- Get pre-approved in as little as 24 hours. Once your loan application is submitted, you should receive your pre-approval letter in as little as 24 hours.
Congratulations! You’ve made an offer and reviewed all the documents the seller has provided regarding the condition of the home. But, one important step before you finalize your real estate offer could help you avoid costly home-buying mistakes and that is the home inspection.
Hire a professional home inspector to give the house a standard inspection that includes:
- Room-by-room review
- Exterior home components
- Electrical systems
- Foundation and structural components – both interior and exterior
- Heating/air conditioning systems
- Plumbing systems
- Attic/basement/crawl spaces
Once you have arranged for a home inspection, plan to accompany the inspector for the last hour of the procedure. You have the right to be there, and leading home inspection companies will encourage your presence. It helps you to better understand the findings in the report and will reduce post-closing surprises. Don’t forget your list of questions and items of concern.
A thorough home inspection covers more than 1,000 items, everything from foundation to roof, and takes two to three hours depending on the size and age of the property. The report should reflect the condition of about 400 items. A typical inspection can range from $300-$600
Home Inspection Findings
Some common items a home inspection could uncover are:
- Maintenance problems such as rotting decks, paint chips, water damaged ceilings, etc.
- Electrical problems (even faulty fuses can lead to bigger difficulties in the future)
- Drainage problems, which could include water intrusions below the home
- Roof leaks and defects from aging
- Poor ventilation, especially in an attic; this is the time to assure that all vents are clean and working properly
- Excess air leakage due to poor weather stripping and subpar caulking around fixtures
- Failed window seals, which are routinely found with dual pane windows
- Environmental contamination caused by asbestos, mold, formaldehyde, lead paint, radon, soil contamination, and/or water contamination
- Faulty lines in water heaters, overflow piping, and/or hazardous flue conditions
TIP: Structural damage caused by water seepage into the foundation, floor joists, and door headers should be discovered at the source, and can be easily identified with a home inspection.
Protecting your new home with insurance is a must. How well you do that depends on the details of your policy. And while you are not required by law to have homeowners’ insurance, mortgage lenders require that you do.
A standard policy will suffice in most instances. It protects against several natural disasters and catastrophic events. However, it will not guard against earthquakes, floods, war and nuclear accidents. The policy can be expanded to include these disasters as well as coverage for such things as workers’ compensation. In fact, the lender may require that you purchase flood or earthquake insurance if the house is in a flood zone or a region susceptible to earthquakes.
You can also cover the depreciated value of personal property, such as televisions and furniture, by purchasing a replacement-cost endorsement. This is an extension of coverage that can enable you to replace the item with one of comparable material and quality.
Closing can also be referred to as settlement or escrow. In CA, it is called escrow. I will guide you through the closing process.
Clear Title & Met Conditions of Sale
In advance, a title company is usually hired to conduct a search for any recorded documents that affect the deed to the property. Examples include easements, liens, tax assessments, covenants, conditions and restrictions, and homeowner association bylaws. The buyer and lender must approve the preliminary title report prior to closing.
Once the conditions of sale have been met and the preliminary title report has been approved, all parties will agree to sign closing documents. The preliminary title report then becomes the final title report, on which any applicable title insurance is based.
Down Payment, Closing Costs and Funding
If everyone agrees that the papers are in order, the buyer submits payment to cover the closing. If the lender will be paying your annual property taxes and homeowners’ insurance for you, a new escrow account (or reserve) is established at this point.
Finally (and here’s the best part) you receive the keys to your new home!
TIP: After the documents have been signed, notarized copies will be forwarded to the lender, funds will be released, and the sale will be recorded at the local recorder’s office. This legal transfer of the property may take a few days. It is at the point of deed recordation that you become the official owner of the home.I
6 to 8 weeks prior:
- Purchase or rent moving supplies: tape, markers, scissors, pocketknife, newspaper, blankets, moving pads, plastic storage bins, rope, and a hand truck. Free boxes can usually be obtained at a local supermarket, but consider purchasing wardrobe boxes for clothes.
- Have a garage sale to clear out unwanted items and plan accordingly. Consider donating unwanted items.
- Keep a detailed record of all moving expenses. Your costs (and donations) may be tax-deductible depending on the reasons for your move.
2 weeks prior:
- Hire a reputable mover or rent a moving truck. Be sure to get referrals or references, check with the Better Business Bureau, get estimates and purchase moving insurance.
- Two weeks before moving day, contact your telephone, electric, gas, cable/satellite, refuse and water companies to set a specific date when service will be discontinued. Contact utilities companies in your new town about service start dates, including Internet and telephone services.
- Notify healthcare professionals (doctors, dentists, veterinarians) of your move and ask for referrals and record transfers.
- Register children for school and ask for school records to be transferred.
- Notify lawn service, cleaning and security companies when service should be terminated.
- Advise the post office, publications and correspondents of change of address and date of move.
- Check your homeowners’ insurance and make arrangements for new coverage.
- Have tools handy for breaking down beds and appliances.
- Give every room a final once over. Don’t forget to check the basement, yards, attic, garage and closets.
- Have the final payment for the movers and money for a tip.
- Don’t forget to check in with me –I may be able to provide useful local advice and/or referrals.
TIP: Move valuables (jewelry, legal documents, family photos and collections) yourself – don’t send them with the moving company. Make sure you have a complete home inventory of all your possessions.