Thinking of buying a home in North San Diego County?
Buying a home is a challenging and sometimes daunting process. Here are some tips to help you get started. If you’d like more information about the home buying process, please sign up to receive my Guide to Purchasing a Home.
Are You Ready to Buy?
This requires a thorough look at your financial situation along with your needs, wants, lifestyle, long-term goals and dreams.
Establish a Price Range
You’ll want to find out what you can afford and how much you’ll need for a downpayment and closing costs. You can start by using a mortgage calculator. I have several that will help. But, you really need to speak with a mortgage professional. They will let you know what you need to do before you buy, what loans are available for you, and how much you can borrow. Finding the right lender is important. See my article on selecting a lender.
Determine What You Want in a Home
What areas, neighborhoods and types of homes best fit your needs? What do you need near you; work, schools, shopping? I have a buyer’s questionnaire that will help you determine what is important to you in a neighborhood and a home in North San Diego County. This is a big decision and requires consideration of your needs today and in the future.
Know Your Market
Most news stories focus on the national market, but the local market can often be quite different. It’s important to understand what is happening in your market and with interest rates in your area. I post monthly statistics for the San Diego County and North San Diego County real estate markets so you can stay up to date with our local market. You can follow current interest rates there too.
Put Your Financing in Place
Contact your mortgage professional again before you start looking at homes. Make sure they understand your financial situation, short and long term plans, and if you are comfortable with a mortgage payment that could change. Ask them to go over the different types of loans that are available to you, and review any possible homebuyer or down payment assistance programs you might be able to use.
Once you’ve looked at all of your options, have your lender preapprove you for a home loan. Sellers will take your offers more seriously when they know you are already approved for a loan. Your lender should also give you written estimates of the approximate amount of cash you will need for your purchase and what your future monthly payments will be.
Find the Right Home
Choose a local real estate agent who knows the area. Once you know the price range you’d like to look in, tell them what is important, such as the commute to work, weather, lifestyle, places you want to be near, etc. They can suggest areas and homes that fit those needs.
Bring a checklist with you when viewing homes like this one offered by HUD to help you decide which homes work best for you.
Make an Offer
If you are ready to purchase a home, look at recent sales that are comparable to the home you want to buy. Your REALTOR® can provide you with these. Discuss the contract, market and negotiating strategy with your REALTOR®. Your offer will not only stipulate the price, but will also include other important items such as inspections, disclosures, closing date, and division of fees and costs.
The Escrow Process
Once you and the seller have come to a mutually acceptable agreement, you will start the escrow process. In California, escrows are usually used to transfer real property. Escrow is a neutral party who takes instructions from the buyer and seller (usually through the REALTORS®) based on the purchase contract. Escrow makes sure that no funds or property changes hands until all instructions in the purchase contract have been completed.
Buyer’s Upfront Fees
While most of the funds required for a home purchase are passed into escrow right before the property transfers to the buyer, there are several upfront escrow costs you may have. The most common of these are the earnest money deposit, and the cost of inspections and appraisals.
Home Inspections vs. Appraisals
Home inspections and appraisals are two different things. Home inspectors check the structure and major systems of the home. They might also recommend that systems be further inspected by specialists.
Appraisers give opinions on the property’s value by comparing the property to other, similar past sales. Lenders use appraisals to protect their interests, but buyers paying cash can also require that the home be appraised.
The closing is the day you’ve been waiting for: when ownership of the home officially transfers from the seller to you!