1. Finances

How much money do you have for a downpayment? Do you prefer a low or high down payment? Which you choose, affects the loan programs that are available to you.

Everyone thinks that a low down payment is great, but what they don’t realize is that it means a higher monthly payment.

So, 20% is the standard down payment. And even with that, you’re going to have competition. The best way to be better than your competition is by having a minimum 20% downpayment and higher if possible.

Look at all your sources of income… Including Mom and Dad. Can they gift you money? Now’s the time to ask.

2. Talking to a Lender

The lender is going to give you the real low down on what you can afford. They are going to pull your credit, talk to you about your monthly expenses, go over your income, and then give you the “magic number”, of what they will loan you.

Most lenders will never loan 100% of the sales price of a home. Only very special people like VA (Veterans Association) loans do that.

3. Escrow costs

In California, we use a third party to help us process the loan payout, the title recording, the payment of taxes and the transfer of money. Estimate that the costs paid for these services (excluding taxes and repairs) are about 1.5-2% on top of the sales price.

4. Are you being realistic in what you want?

Mostly everyone wants a turn key home where everything is all fixed and looking pretty. So expect competition. Also if you are looking for a 4 bedroom home, in an area where there are not many, you may have to reconsider your wants from what you can actually get, if you want to land a home.

5. How motivated are you?

Even if you were motivated to buy a house tomorrow and you have all your ducks in a row, there’s competition. Seems unreal right? But its the truth. So be very motivated and you will get something sooner.

6. How quick can you move?

Are you only able to at houses on the weekends? Moving asap as property goes on the market can make a difference in some cases. So think about how quickly you can react.

Make sure your real estate agent can do the same.

7. Home Inspection

Here’s where you hire someone who does this all the time to look at the bones of the home to tell you if they find anything suspect. You may have to hire several inspectors to get a professional opinion or estimate on the items found.

8. Making your Offer Attractive

Your real estate agent should be gathering intelligence as to why the seller is selling and what they are looking for in an offer. Then make your offer appealing to the seller.

9. Evaluating Home Values

You need to know the value of the homes your bidding on. Sometimes homes are listed below market value to attract offers, while other times they are overvalued. Check the comparables, or comps for short.

10. Hurdles

An accepted offer is not the only hurdle, its only the first. Here are others you’ll have to pass:

• Property Inspection - Here is where you inspect the property to discover if there are any unknown or undisclosed problems with the property. Once you know what these are, if any, you will need to see if the seller will repair, buy the property as is, or not proceed with the sale.

• Appraisal - The lender will hire an appraiser to determine the value of the property. This will determine how much the lender will be willing to lend you. If the home does not appraise at the price you offer, you will need to renegotiate the price with the seller, come up with the difference or worse, walk away from the property.

• Loan Approval - The lender will work toward verifying all of the information previously provided and this takes time to verify with other sources. If nothing has changed since the pre-approval, and all your income to debt ratios work out in their program calculators, you are approved.

By Camelia V. Vera, DRE 01871575