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There are many real estate market
forecasts and predictions available - however the bottom line is that
if you want to buy your first home—there is no wrong time. This is
because the motivation to buy is not determined by regional market
conditions or by location, but rather by your personal needs. Industry
opinions, economic reports, and investor speculation do not sway or
predict when a particular individual will be ready to buy. For the
great majority of people, the most compelling reasons to buy a home are
based on individual circumstances and personal needs. Some of these
factors are:
• Family needs and desires for children/parents/in-laws/couples
• Convenience to home, work, school, social activities
• New work situation
• Sense of achievement or fulfillment
• Freedom and independence
• Sense of security and privacy
Even
though there are many changes in the market, both up and down—people
still need and want to buy homes. This desire to buy a home is deeply
rooted in the fabric of our national consciousness. The intrinsic value
of homeownership—defined as worth based on perception of value--gives
far more satisfaction than ROI calculators can quantify.
Today,
there are many different loan programs with flexible terms to fit all
buyers. There are city and county down-payment assistance programs to
assist in buying a home. There are condos and manufactured homes to
close the affordability gap. For future buyers with blemished credit,
there are many debt reduction and counseling programs to help gain a
fresh start.
How do you make the leap to become a homeowner?
First, you must determine that you want to buy a home. Sounds simple,
yet many people find that getting started is the hardest part. There
are perceived obstacles in the minds of many would-be homeowners: Can
we save enough money for the down payment? How can we get out of our
current lease? Where can we afford to live?
The goal is home
ownership, and there are many steps to reach the goal. You may not be
financially ready yet, but you need to ascertain where you are NOW in
relation to your goal.
Get your finances in order. Accurately
determine your financial situation and check your credit to determine
where you fall as a borrower. Look at all of your available assets for
your down payment and examine all of the finance options available to
you. If you have some credit blemishes, take the time to make timely
payments to your creditors to present the best financial picture to
your home lender. Make sure that you have a track record of stability
in your employment history. Postpone any major purchases such as cars,
motorcycles, or large appliances until after you close escrow. Your
actual home purchase may still be 12-18 months down the road, but you
can still prepare for it now.
Get pre-approved for your
mortgage. Once you’ve cleared the financial hurdles, talk to your
lender or broker to find out how much you can afford to borrow along
with the expected out-of-pocket costs you will need to incur for the
closing. This will include the required down payment (if necessary)
along with funds for closing costs, which can run 3-4% of the purchase
price.
Pre-approval also allows you to shop for a home with an
accurate price range. If you are buying in a seller’s market, you may
want to search for homes that are considerably below your approved
price range, so that you can have the most room for negotiation.
Find
a credible licensed real estate agent. Look for an agent that can work
with you based on YOUR needs and your schedule. Check references of
previous clients and make sure that he or she is responsive and
available to you. You may not know exactly what you want in terms of a
new home, and your agent should work with you to determine your needs
and help you find a property that meets your immediate and future
needs. Your agent should be familiar with the area where you plan to
move. Check with family and friends for successful agent referrals. Ask
them how satisfied they were with his/her services and if they would
use them again.
Become an informed and practical buyer. Once
you determine where you would like to live, determine what factors are
most important for your family. Calculate your new commute time and
research school information for your children. You may want to consider
the proximity to a place of worship and shopping in the area. Make sure
to evaluate the surrounding factors that are most important to you,
along with factors that are least important.
Find a home that
works for you. Check out the floorplan to make sure that it meets your
needs. Envision yourself along with your family, living in the home.
What are the key points of consideration for your home? If you spend a
lot of time in the kitchen, then you want to make sure that the kitchen
can accommodate your habits.
If you will be working from home,
make sure that your home office setup will work. Make sure that all of
your telecommunications and electrical needs can be met. Is the
backyard adequate for your family? Do you need a garage? Are you
willing to make major repairs to the home? Does the style reflect your
taste? Can the home grow with you over the next 5 years, 10 years or 30
years?
Make the offer. Once you have located a property that
meets your needs, make an offer based on the listing price, along with
comparables information and market considerations. Your agent can work
with you to determine the best price, along with any contingencies for
the sale. Some strong purchase offers include:
• Short contingency removal periods
• Short escrow periods
• Increased cash deposit
• Love letter from buyer
• Pre-approved letter from lender guarantee for purchase price
It
is good to get an independent home inspection, so that you can know
what the potential pitfalls and future maintenance needs may be. Your
offer may be accepted as-is; you may face a counter-offer from the
seller, or you may be rejected. In a seller’s market, you may find
yourself bidding with several other buyers for a single piece of
property. Work with your real estate agent to determine what is
customary in your area. This is when his/her negotiation skills really
come in handy!
Once your offer has been accepted, you will
enter an escrow period, where all of the title research will be
handled, funding requirements met; tax and title transfer paperwork
managed. Prior to the close of escrow, you will sign all of your
finance paperwork, and pay your remaining deposit and closing fees.
After funding is complete, the title company will record the new
purchase deed with the County Recorder’s office, and you will
officially “close”.
Congratulations! Now get ready to move!
Make sure to connect your new utilities (and disconnect your old
service) along with mail forwarding.
Everyone wants someplace
to call their own, and whatever your financial picture, there is always
a way to purchase a home. The purchase of a home can be a lifelong
achievement, but one that is truly a worthy accomplishment.
About the author:
Cecelia Taylor writes for San Diego Real Estate Authority.
Find detailed descriptions of over 85 communities in the San Diego real
estate market; compare average real estate prices in these communities
and more. Everything you need to make an informed decision about
purchasing your next home in San Diego is right here.
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