Prepping To Be Ready To Buy Your First Home
Are you thinking of becoming a first time home buyer? This is a great time for it! Due to the current economic climate and game-changing technology in the housing market, now is certainly a great time to dive in. After all, we are currently enjoying:
Low interest rates
With so many first time home buyer options, first time home buyers are being approved at mortgage rates that are extremely enticing. Can you believe you can still get a new mortgage for less than 4.0% (depending on your credit score, credit history, etc. But even if yours isn't perfect, you can often still get an historically low interest rate. HAPPY NEWS!) Things could change soon. These may be the lowest home loan interest rates we’ll see in a long time. That means affordability is high and this is the time to take advantage of them.
Prices are on their way up
One caveat though. Even though home loan interest rates are currently low, house prices are increasing due to the high demand and low supply of homes on the market—prices went up 5.1% year-over-year in November 2015. If you are thinking of buying, putting it off even just a few years could lead to higher home costs and you would then get less home for the money you spend!
A growing job market
The U.S. added 2.65 million jobs last year. The Sacramento Roseville area is one of the many areas with more job coming. Job security is increasing along with available work, which leads to high consumer confidence – great news for all from millenials on up!
Lower gas prices as well as energy prices equals more bucks in your pocket and more purchasing power. The money you’re not burning up in your gas tank or your heater can instead be used to save for your down payment and closing costs as well as, perhaps, being able to stretch a bit more towards a bigger monthly home loan payment.
First Time Home Owner Tips To Help You When It's Time To Buy
“OK, these are valid points,” you think. “So what should I do now that I've decided to buy?” Glad you asked! 😉 First, realize that you can spend hours and hours researching the subject and still miss important info. That's why I always used a REALTOR and why my first tip is to recommend that to you as well. (And yes, I'd LOVE to help you!)
Here are a few more tips for a first time home buyer
- Start saving now no matter how far away you think you might actually be ready to become a first time home buyer. If you're reading this and thinking, “Sure, I'd love to buy my first home but I need to finish…” That's OK. Start saving for that down payment now anyway. You can buy a home with only 3.5% down (sometimes even less) and that was something we did and appreciated the option. BUT it makes a huge difference in your monthly payments if you can put more money down and not have to pay PMI (private mortgage insurance – and if you are getting a VA you will usually NOT have to worry about the down payment or PMI though you will probably have some closing costs.)
- Carefully research the whole topic of loans and lenders. A favorite resource of mine, Simple Dollar, has a great resource to help you with this at their post, A First-Time Home Buyer’s Guide: What You Need to Know. You can also find a plethora of information at my Pinterest Board – Home Loan Information.
- Get a good loan officer / mortgage banker early! There are many companies, lenders, and resources out there that can help you get the best rates. But be careful! Many are NOT local and don't know the specific needs here in the Sacramento Roseville area and that can often cause delays in your escrow and other headaches. I highly recommend talking to a local loan officer in addition to or instead of a long distance company. While you are at it, ask what first time home buyer options area available that will allow you to save on your mortgage rates. Have them work through all the numbers for you. It may seem like a lot of work to shave less than a point off your loan rate, but it can save you thousands over the course of the loan.
- If you have credit problems, it's still wise to talk to a good lender who is experienced with first time home buyers. They can make suggestions for first time future home owners with bad credit and work to help you bring your credit score up. And they might have ideas that will help you speed your way through your credit problems faster than if you did it on your own through practical resources and plans.
- Find a friend or relative who is related to Eeyore (the cute and negative donkey from Winnie the Pooh). Seriously. You are very likely to fall in love with a home. Once you do, you are likely to overlook problems with the house or the terms of buying. An overly-cautious friend or parents can help you by giving you another practical perspective.
- After you find a home you like, make sure you like the neighborhood. The house may seem perfect, but don’t ignore the surroundings. You don’t want to end up in the suburbs if you’re going to miss walking to your favorite bistro. On the other hand, you don't want to go for a city home if what you really want is peace and quiet. I also highly recommend talking to neighbors, visiting at various times through the day/evening, checking each serious prospective home against Megan's Law sites and crime-mapping sites (Click here to find links to these safety sites and more at my Pinterest board – Safety Tips) or even call and talk to the local police authorities. As all those police and law dramas love to say, do your “due diligence” in researching to be sure you are really happy with your maybe-new house.
- Unless you are extremely handy with your tool box and have plenty of time, I recommend that you get a home warranty. There are several options available in most areas. I've personally used Old Republic Home Warranty for decades. No one is perfect but I've been very happy with them. It helps me spread out the cost of any repairs over time and they've really saved my bacon more than once. That's a big help for first time home buyers who may be used to the landlord fixing everything.
- Patience. Be patient with the escrow process. It will seem like it takes forever but it'll be over before you know it. AND DURING ESCROW DO NOT SPEND ANY EXTRA MONEY- NO FURNITURE PURCHASES. NO NEW CAR. NO NEW CREDIT CARDS. That is SO vital. So many escrows have fallen apart because the lending agency always runs another credit check right before the end of escrow. If they spot a big purchase, they are likely to cancel the whole shebang!
12 Tips For Moving Into Your First Home
- First, more patience. Escrows do NOT always end on time. Sometimes they may end a day or two early. Hooray. Other times they may end a day or even a week late. So make sure that all your arrangements for moving are as flexible as possible and perhaps even have some contingency plans in case you can't move in right away. Even though you may be renting, some landlords are more flexible than others. Communication can be vital!
- Schedule movers but again, think flexibility. If there is a serious chance of delay, pods and pod movers can be a big help as can storage units for a short term rental. If you are doing it yourself, you should be able to adjust the date at a reasonable rate. Just let them know in advance when you make the reservation that you might have to keep the moving truck a bit longer.
- Once you have the key and the house is yours – take a deep breath and prepare to be extremely busy and tired and happy for a few days. And smile, you're officially a first time home buyer, indeed! 🙂
- Check to see if you have a mailbox cluster with a locking mailbox. If so, be sure you get the mailbox key. If the sellers don't have one for you, you can talk to the post office and they should be able to help you. I had one client who ran into a delay with this and needed something in the mail so it definitely pays to stay on top of this.
- Set up forwarding from your old home to your new one.
- Cancel and start utilities at the old and new home.
- Say good-bye to all your old neighbors and look forward to making new friends.
- Make sure you got a copy of your title insurance and put it in a safe place.
- Put your final settlement statement – HUD1 – in a safe spot where you keep your tax documents. There may be tax deductions for first time home owners on it so save it and give it to your tax preparer.
- Clean your new home (I've only once not had to do much – and even there, I did do some wiping down.)
- Move into your new home.
- Clean your old home. Do it well. The money you get back on your deposit will come in very handy in the days to come.
YOU Are Now a HOMEOWNER
Take a deep breath and enjoy the moments of officially being a first time home buyer. You are NOW a home owner! Yes, there will be issues ahead. But there should also be sweet memories, fun BBQs, getting to know new neighbors, and so much more. Enjoy the moments and memories to come!
Ultimate Home Buyer's Guide by Kaye Swain
P.S. Here's even MORE great info for buying a home – even if you are NOT a first time-er –
P.P.S. Want to search for your first home in Roseville or Sacramento or beyond? Just click either of the options below. The first set of homes for sale are in Placer County and are $300,000 or less. The second set is homes for sale in Sacramento County that are $300,000 or less. Once inside, you can easily change the city, prices, etc. to your personal options as you head down the exciting path to becoming a first time home buyer. 🙂
Placer County Homes for sale $300,000 or less
Sacramento County Homes for sale $300,000 or less
P.P.P.S. Click here and sign up to get my free weekly emails where I share Roseville and Sacramento area updates, fun events, holiday happenings, real estate market info, and more. KayeSwain.com/free-weekly-area-updates
Be sure to Call Kaye at 916-768-0127 for all your real estate needs, including becoming a first time home buyer. 🙂