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What Does it Cost to Buy a House in California
10 questions that every home buyer should know when purchasing a home in California!
10 questions that every home buyer should know when purchasing a home in California!
Purchasing a home will probably be the biggest purchase you have in your life and the process can be a little stressful and intimidating. That is where working with an experienced team comes in. Over the course of my career in the mortgage industry, I get asked many important questions from the 1st time home buyer to the home investor. I have addressed the top 10 questions that seem to come up more often than any others.
If you are a first time home buyer or a buyer looking to purchase a home after you lost one through a short sale, foreclosure to bankruptcy, lets address your concerns below to assist you with a smooth and successful home buying process.
1. Do I need a Realtor to help me purchase a home? Unless you are purchasing a For Sale By Owner (FSBO), Yes you will need the assistance of a Licensed Real Estate Agent. The majority of the homes listed for sale in California are listed with a Realtor, weather you go with the agent who has the property listed for sale known as the listing agent, if you go this route you will be kinda your agent yourself and would have to locate the homes on your owns and once you find one then you will work with the agent who listed the home. Going this route can be very daunting on your time and you have a great chance of losing out on a home because you have your daily activities in your life going on. That is why I recommend you with a full time agent who knows the market and has your best interest in mind, it does not cost you anything to have an agent search the available homes that meet your criteria.
2. What loan program is available to me? Very good questions, that is where a direct mortgage lender will benefit you the most to discuss what loan programs are being offered. Loan programs can be confusing and the mortgage business has a lot of acronyms and industry jargon. Find a lender who has many years in the business and offer a wide range of loan products that will fit your budget. This is your first step when purchasing a home, start with a local direct lender to research what programs best fits your needs before looking for a home.
3. What program do I qualify for? After a licensed mortgage professional has reviewed your income, credit, assets and supporting documentation can they properly discuss a loan program. Do yourself a service by completing a full review of these items so you know what you are working with, just answering a few questions over the phone will not benefit you in any way when looking for a home. In 2014 our lending guidelines have only tighten for a home buyer.
4. What are the cost when purchasing a home? You will have 3 area of cost when purchasing a home. Before a lender issues a strong pre-approval letter, he or she should discuss the cost with you.
- The out of pocket cost up front such as: cost to open escrow, home inspection, termite, credit report and the appraisal, other fess can be inspections like a septic, well, roof and mold reports.
- Down payment, this is the percent of funds based on the program and price of home, example: 5% down on a $300,000 priced home will equal to a down payment of $15,000 and the loan amount will be the remainder which will be $285,000.
- Closing cost: cost are in 4 areas – title fees, escrow fees, lender fess and buyer pre-paid fees. These fees vary on loan program, the loan amount and the purchase amount.
5. What are points? This is a loan cost to buy your interest rate down. If you wish to obtain a lower interest, there will be a cost of that lower rate depending on what the rates are that day when you are ready to lock your loan. Interest rates adjust every day (excluding weekends and holidays) and sometime serval times thorough out the day. Discuss this option with your lender, because there may be a benefit to buy points to lower your interest rate.
6. Can I make an offer on a home less than the asking price? Yes, but that will ensure you offer will never see the eyes of the seller. Making a low offer will not present that you are a serious buyer and your will be quickly reject in a seller’s market and we are currently in a seller’s market. Go in with your best and strongest offer to ensure your offers see the eyes of the seller.
7. What do I do once my offer is excepted? That is where the team kicks in and we must all work together to ensure that the time lines are meet. Starting with the right experienced loan officer and realtor from the beginning will help these time lines. Working with full time industry leaders will make the process that much less stressful. Once your offer is excepted by the seller, then you will need to open escrow and that is where the earnest money deposit will be required. Also, you and your agent will need to schedule the home inspection and the agent will send the fully executed purchase agreement to the lender so they can start your loan paperwork. There are a few more steps to take and you will need to discuss those step with your realtor and loan officer to go in detail.
8. When do I need to do the home inspection? Once your offer has been excepted then you will need to schedule your home inspection right away with your realtor. You will normally have 7 to 17 days to complete this inspection and present the findings to the seller. During the contingency period which is the 7 to 17 days is the time you can back of the purchase and receive your deposit money back, do discuss this with your realtor.
9. How long does the loan process take after my offer is excepted? The normally processing time is 3 to 4 weeks. At the very beginning when you contacted a loan officer is critical, because that will set the tone on processing time. All parties, selling agent, buyer agent, title, escrow and lender must work together to ensure you have a smooth process and stay in communication with one another to address any issues that may come up. This is essential that you have a strong pre-approval letter very the beginning know that the lender addressed any income, credit or assets issue that will not be an issue during the loan process.
10. What are the benefits of owning a home? The financing benefit are the tax advantages that you can write off on your taxes, need to consult your tax adviser on what you can write off on your taxes. What ever you are paying in rent, I bet your budget can handle a mortgage payment. It does not hurt to explore the possibilities of owning a home, call me at 909-503-5600 and we can review how you can own a home.
If you are 1st time home buyer, you will have a lot more questions than the 10 above and i welcome the opportunity to address each and every questions you have about purchasing a home in California.
10 questions that every home buyer should know when purchasing a home in California!
by Nathan Rufty
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