Buying your first home can be a draining task. But millions of people have been there before you and survived. If you do your research, you’ll have the best possible chance of finding a place you can afford in San Diego for the right price.
1. How are your financials?
Before clicking through pages of online listings or falling in love with your dream home, do a serious audit of your finances.
First look at savings. Don’t even consider buying a home before you have an emergency savings account with three to six months of living expenses. Look at how much is left over in your savings and investment accounts that could go toward a down payment.
Next, review exactly how much you’re spending every month – and where it’s going. This will tell you how much you can allocate to a mortgage payment. “Make sure to account for every dollar you spend on utilities, kids’ activities, food, car maintenance and payments, clothing, entertainment, retirement savings, regular savings, miscellaneous little items.
As you research San Diego neighborhoods, factor in how moving would change your transportation costs to work.
2. Research the benefits of first time buyers
Before you start meeting with lenders, it’s good to know what constitutes a good deal. Look into all available deals or programs that might make it easier for you to find a property you can afford.
3.Find a realtor in San Diego.
Once you know how much you can afford and the loan amount you’ll qualify for, it’s time to find a real estate agent. Look for one who works with a team of people who can offer suggestions about home inspectors, insurance agents, etc.
4.Make a appointment with lenders.
Many Realtors will not spend time with clients who haven’t clarified how much they can afford to spend. And in most instances, sellers will not even entertain an offer that’s not accompanied with a mortgage pre-approval. That’s why – if you don’t have all cash (how many first-time buyers do do?) – your next step is talking to a lender and/or mortgage broker.
A lender or broker will assess your credit score and the amount you can qualify for on a loan. He or she will also discuss your assets (savings, 401(k), etc.) and debt, as well as any local programs that might be available for down payment assistance. That’s where your homework on first-time home buyer programs can help. If you think you qualify, look for a lender that handles the program you hope to get.
Do some research online, but work with a live person who can review your situation, answer questions and, if necessary, suggest how you can improve your credit.
5. Shop around for a mortgage.
Don’t be bound by loyalty when seeking a pre-approval or searching for a mortgage.
Fees can be surprisingly varied.
When you’ve gotten the best deal you can, get a mortgage pre-approval so you know how much house you can buy. And make sure you are pre-approved, not just pre-qualified.
6. Have a back up.
Qualifying for a loan isn’t a guarantee your loan will eventually be funded: Underwriting guidelines shift, lender risk-analysis changes and investor markets can alter.
7. Decide on a neighborhood in San Diego.
You’ll probably have an ideal location, but keep an open mind as you see how much house you can buy in different areas. Homes and land are less expensive the farther they are from a metropolitan area. The stress and costs of a long commute can undermine marriages, finances and mental health.
8. When you find a property, crunch your numbers again.
If you’re thinking about making an offer on a home, take another look at your budget. This time factor in closing costs, moving expenses and any immediate repairs and appliances you may need before you can move into the home. Don’t overlook hidden costs such as the home inspection, home insurance, property taxes, homeowners association fees and more.
9. Look over utility bills.
Before submitting a purchase offer, request the energy bills from the past 12 months to get an idea of the average monthly cost.
10. Don’t forget a home inspection.
After your offer has been accepted, splurge for a home inspection. Spending even $500 can educate you about the house and help you decide if you really want to pay for necessary repairs. You can also leverage your offer depending on the results of the inspection report and make the seller financially responsible for all or some of the repairs.
The Bottom Line
Purchasing your first home is perhaps the biggest financial decision you’ll ever make. Don’t take on more of a financial obligation than you can handle.
We have a professional and experienced team that can help you. Contact us today!