The first-time homebuyer has become near extinct in Orange County. With the spring homebuying season now in full swing (March through June are the year’s four busiest months), here are 10 tips for first-time homebuyers:
- Determine what you can afford – The first step is to meet with a lender, review your own finances, and see what you can afford with a downpayment. If you can only realistically afford a home at $400,000, do not waste your time looking at a home that is $700,000. As a real estate expert, we often warn not to shop for the most expensive home you can qualify for, unless you can truly live with the payment that comes with it.
- Check for down-payment assistance – As a first time homebuyer, check to see if you qualify for one of the down-payment assistance programs. In Orange County, a family of four can qualify for state and federal assistance even with an income as high as $108,350, said Karla Lopez del Rio of NeighborWorks Orange County, a HUD-approved housing assistance agency. Do not assume your income is too high.
- Get pre-approved – Getting a lender to pre-approve a loan before you shop. This can make your offers more attractive, and protect you from keeping deals from falling apart. Additionally, get all the documentation you’ll need for the loan process. Speak to your lender about what you need. When home shopping, be sure to avoid taking on new credit at that time. Keep your credit card balances below 30% of your credit line.
- Pick an agent who is right for you – Look for an agent with whom you can communicate with. Feel free to take on an interview approach. Keep in mind that an agent works for you and needs to be concerned with your best interests. Make sure that you find someone who you can trust and is informed and knowledgeable.
- Find a home you can afford – Make a wish list of where you want to live and what you want to have in your home. But, don’t fall in love with a home without acknowledging its flaws. Move on from a home if the asking price is unrealistic or if the seller is being unreasonable…or if the bidding rises beyond your budget. Be willing to research and discover multiple properties prior to committing to one.
- Scope out the neighborhood – Your agent should provide you with local information about the neighborhood. Then, walk and drive the neighborhood, meet people, and get a feel for what it would be like to live in the community. Spending time around the area will help you find out if it’s truly a place you can live.
- Make a realistic offer – While buyers have limited negotiating power in the current market, be savvy with your asking price. Be willing to place an offer a little over the asking price but always keep it within your budget. With that, you might run into trouble getting a loan if your offer is higher than the lender’s appraised value of the home. Lenders won’t approve the loan if the appraisal is less than the loan amount.
- Find a good home inspector – Be aware of deadlines during escrow. And respond in a timely manner to the home and termite inspections, seller disclosures and the preliminary title report so you don’t miss your chance to opt out if a problem arises. Read your loan documents or get someone you trust to help you understand what’s in them. The two most important things to look for in your loan packet are the settlement statement (listing all the costs and fees of the loan) and the note (the actual loan contract).