So you think you are ready to take the plunge and buy a home in San Diego. What’s the first step? Well, buying a home is a big step, especially if it’s your first home purchase. After all, it is the largest purchase most people make. It requires thought, preparation, planning, sometimes sacrifice, and the LAST step in the process is looking for a home!
- Unless you are a veteran or active duty military eligible for a VA loan, you will need a down payment, somewhere between 3.5% and 20% of the purchase price. With some loan programs, you can obtain a “gift” of the funds from a family member. You will also need normal closing costs, 3% of the purchase price is average, but it can be more or less. You can request that a seller pay some or all of the closing costs. If you are asking the seller to pay the closing costs, you don’t have as much negotiating power when it comes to the price. In today’s market, you can expect to pay the asking price OR MORE if you are asking for closing costs.
- Now is the time to meet with your lender and become pre-approved for a loan. Yes, BEFORE you go house hunting! The lender will need tax returns for the last two years, your most recent pay stubs, copies of your bank statements, information about all your current debt and more. Start collecting the information so it’s easily obtainable when you need it.
- The lender who is loaning you the money to purchase a home will require that you have some money in “reserve” for an emergency. Even if you have family members willing to “gift” you the down payment and closing costs, you need to have some money saved. Once you are a home owner, you will be responsible for repairs and maintenance on your home. Plumbing leaks, dishwashers break, windows are broken. And, if you are like most people, you will want to make the home your own with paint, maybe carpet or flooring, new furniture or appliances. Now is the time to start the discipline of saving your money! It may mean fewer lattes, fewer dinners out, or skipping a vacation. It will be worth it!
- Do not buy anything on credit now. It will affect the purchase price of the home you can buy. Wait until AFTER you have closed escrow to buy the new car, furniture, washer and dryer. Do not co-sign a loan for anyone else.
- Make a wish list and include everything you want in a home…the area, the size, number of bedrooms, bathrooms, garage, pool or no pool, fixer upper or not, etc. Next, divide the list into “Must Haves” and “It Would Be Nice If It Hads”. Realize that you won’t find everything on either list in any home. Be realistic.
- Your real estate agent will meet with you and discuss what you want in a home and advise you on what you can and can’t expect to find in your price range in the area you desire. A good agent will take the information and find the homes that meet your requirements. They won’t show you homes that don’t. Why would you want to see them anyway?
The home buying process will be exciting, stressful, and sometimes tiring. Achieving your goal of home ownership is the ultimate reward!