Congratulations - you have taken the first step towards owning your first home! Your decision to buy a home is the biggest financial decision many of us will make, and will provide you with many financial benefits, in addition to providing shelter. Whether you like beachfront properties, a cottage home with white picket fences, or a tudor-style home, the idea of owning a home is very exciting. But it can be a bit confusing, if not downright scary. Need more reasons to buy your own home? Check out this chart. Plus, I have put together a larger list of reasons to own vs. rent.
Why should you consider buying? First off, buying a house puts your money to work for you. Historically, property values rise at a rate faster than most of us can save and, over time, beat the rate one can achieve by putting ones money in an interest-bearing savings account. This makes owning a home a great investment. Plus, rents are on the rise upward, which means your monthly expenditures can change very quickly. Assuming you choose a conventional mortgage, your mortgage payment will be consistent. That means your housing expenses will be stable. In short, you can stabilize your monthly expenses, and put the money you pay in rent back into your own pocket.
Want to discuss your situation immediately? Email me or call me at 949-285-1207 to discuss buying your first home.
Here are the key steps to buying a home and how The Clark Group can help make the process easier and faster:
Step One: Contact a Realtor
Contact a Realtor. We will need to spend some time discussing your needs and what is important to you. Plus, we will discuss areas of finance. It would be an honor to represent you in finding you your next home or investment property. To make an appointment to discuss how the Clark Group of professionals makes the home buying process less stressful, fill out our online request form, email me or call us at 949-285-1207.
>> Familiarize yourself with the jargon. There are many foreign terms and acronyms you will be encountering over the next few weeks. Like all industries, real estate has it's own vocabulary. Words like escrow, acceleration clause, and contingency are foreign to many people. Click here for our Glossary of Terms. Naturally, if you have any questions, please don't hesitate to contact us.
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Step Two: Contact A Lender
We recommend that before you begin your house hunting, you contact a lender. During our meeting we will discuss financing. If you don't have a preferred lender, email me or call us at 949-285-1207 and we will put you in touch with a couple of mortgage brokers that provide excellent service and will take time to answer any questions you may have regarding the mortgage loan process.
>> What Lenders Look For: First thing they look at is your ability to repay the loan by reviewing your credit history, monthly gross income, and the amount of your savings to be used for the down payment. For more information on preparing for the mortgage process, please click here.
>> Pull Your Credit Report. We recommend reviewing ones credit report yearly; this will head off most surprises during the loan process. Click here for your free yearly credit report. For additional information on checking your credit report, click here.
>> Find Out How Much House You Can Afford. A basic rule of thumb when purchasing a home is that you should budget one-third to one-half of your income for your mortgage, tax and insurance payments. Click here for a mortgage calculator that will give you an idea of how much house your payments will be.
NOTE: Buying a home involves something called closing costs. Plan ahead for paying the closing costs. Sometimes these can be negotiated into the purchase price (paid for by the seller); if not, the sellers' agent will need to "verify funds" in the first 7 days of the open of escrow. (What they will do is verify that you have any additional downpayment funds liquid, and have funds available to pay the anticipated closing costs. We highly recommend you plan on having these funds available so there are no surprises prior to the close of escrow.
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Step Three: Look At Properties
We go look at those homes that we have identified as meeting your needs and are in your range of affordability. There are literally hundreds - if not thousands - of homes available in Orange County that, at first blush, would merit inclusion in the list of homes to look at. Therein lies the value of my Buyer Consultation: it allows me to apply stricter para maters to what is included in the list of homes for us to look at. (A side note: Our team looks at upwards of 100 homes a week; most every home we show you will have been personally previewed by a member of The Clark Group to double-check that the initial listing information and pictures give an accurate representation of the property. This is another huge time saver for you: We don't leave anything to chance, and have no desire to take you to see something which doesn't fit your needs.)
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Step Four: Negotiating the Purchase Offer
I have found that there can be as much money "made" when purchasing a home as there is when selling it. When a seller considers a purchase offer, many times it is not just the price they are considering: the terms and conditions of the offer are also very important. Does the prospective buyer need to sell a home before they can buy mine? (Called a contingency.) Do they need a longer escrow to save a few more $$$ so they can pay the closing costs? Is the buyer financially qualified to buy my home? These are just a few of the issues the seller and the sellers' agent will go over once they receive the purchase offer(s). Having an experienced negotiator representing you is very important. The Residential Purchase Agreement is 8 pages long; we will answer all questions regarding it while discussing our strategy of getting your offer accepted.
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Step Five: Open & Monitor the Escrow
In California, we use separate escrow and title companies to handle the funds and verify property details. (In some states attorneys handle the escrow.) During the first 7 days it is required that we have our inspection, appraisal and all disclosures completed. We will coordinate with the sellers agent the date and time of the inspection and appraisal. It is customary for the sellers' agent to be present during the appraisal and for the buyers' agent to be present during the inspection. Click to view what charges to expect for escrow and title.
We will have many forms to go over. These include disclosures regarding the condition of the property (Sellers Property Questionnaire (SPQ), an 8 page form), Transfer Disclosure Statement (TDS - a 3 page form), Smoke Detector, Water Heater, Statewide Sellers Advisory, Wood Pest (termite) and other miscellaneous forms. You will also need to contact your insurance company, utility companies and prepare for the change in address.
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Step Six: Home Inspection
We STRONGLY recommend that, when purchasing a property, you have the property inspected by a trained, licensed professional. We have been very pleased with the father and daughter team of Joe & Amy O'Donnell of American Inspection. With more than 32 years experience, Joe and Amy are both graduates of Inspection Training Associates and are required to maintain continuing education credits each year. They are thoroughly familiar with both theoretical and practical aspects of building construction analysis. Additionally, Tom and Amy are members of The California Real Estate Inspection Association (CREIA), a voluntary, nonprofit public-benefit organization of real estate inspectors. This is no time to try to save a few bucks; a good inspector will make us aware of not just the general condition of the property but alerts us to potential problem areas, including changes made that are not up to code, electrical problems, ventilation issues, etc. Again, we very strongly recommned paying for a home appraisal.
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Step Seven: Follow-Up
A huge part of a smooth transaction is follow up. This involves not just negotiating the forms, but also make sure that all required timelines met and complied with. I'm referring to lender needs during the escrow with verification of funds, work approvals, appraisers, home inspectors, termite inspectors, home warranty companies, property repairs requested via our Request For Repairs, and the Final Walk Through. There is lots to do after an offer to purchase is accepted. Having an experienced Realtor to guide you through this process is critical.
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Step Eight: Closing
Closing on a home is almost anti-climatic. Closing occurs when escrow is notified that "good funds" have been received to pay for closing costs and that the loan has funded. What escrow does then is record the deed with the County Recorder. This is the final step in the process. Congratulations, you are now the owner! Both agents receive notice from escrow that escrow has closed and the closing statements are now available (see below). Both escrow and I are available to review the closing statement and answer any questions you have about the closong.
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>> After closing, be certain to check your closing statement (sent by escrow) and your lenders Good Faith Estimate. The Real Estate Settlement Procedures Act (RESPA) allows the borrower to request to see the HUD-1 Settlement Statement that shows all actual charges imposed on borrower in connection with the settlement one day before the settlement, so you will have already received a great amount of information on the fees and charges you are paying to buy or sell the property. If you see a charge or fee that doesnt look right, give your lender or escrow a call. (Note that the closing statement as issued by escrow is a series of debits and credits: by law, they must add up perfectly. That is, the debits must equal the credits to the penny. If you have questions about the closing statement give escrow a call first then, if you still have questions, call your Realtor.
It is a very exciting time, buying or selling a home. I look forward to the privilege of reprensenting you. Please don't hesitate to contact us with any questions you may have. Good luck in all your real estate endeavors!
I Still Have Questions
No problem; We would be glad to answer any questions you have. Click here for contact information or click here for our feedback form.
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