This is a five part series for the buyer looking for a Glendale Ca home. We start with The Money, then cover The Realtor, The Home, The Escrow and Homeownership. Each part is designed to give you the tools to not only buy a home, but to buy the RIGHT home.
Buying your first home is thrilling and scary all at once. You can do everything online- find a home, get an estimate of value, apply for a loan. Simple, right?
But how do you know you are getting the best information? Should you really commit yourself to a 30 year mortgage based on some quick internet research?
Here are some Best Practices every first time home buyer should know.
Money First, Shop Later
Most home buyers started looking at homes months before they were ready to buy. But, now that you are actually ready, you need to get those finances nailed down before looking any further.
The expected down payment is 20% of the purchase price. It is possible to get a loan with a smaller down payment, but it reduces your chances of getting the home you want. An offer with a low down payment has a higher risk of being denied- and homeowners want the lowest risk possible. In a strong seller’s market high down payment amounts are normal and cash purchases are not unusual.
Now is an excellent time to explore the Bank of Mom and Dad. If an outright gift is out of the question, explore an equity share partnership or a short term loan where you refinance and pay them back after the close of escrow. We know of several cases where parents buy a home for cash and then the children get a normal mortgage after the close to pay the parents back. No matter what you do, be sure to consult with a mortgage professional before transferring any money.
Another option is to check into your retirement savings plan. Under certain circumstances, you can borrow against your plan to obtain cash for a down payment now. The most likely candidate is a 401k Savings Plan, but there are others. Talk to your HR department at work or your personal financial advisor and/or tax advisor.
Lots of buyers find the home of their dreams before they get a pre-approval from the bank. And then they lose that house to another buyer. Don’t be that buyer.
Get a pre-approval from a bank or a mortgage broker with an excellent reputation with local real estate agents. Remember the part about how homeowners want low risk? Your pre-approval letter is only as good as the lender behind that statement. A letter from your cousin Guido will not give you a lot of credibility. Local Realtors know who is good… and who isn’t.
So… how do you get a good local Realtor?
I am so glad you asked! Stay tuned for Buy Your First Home, Part Two- The Realtor