How do we buy a home?
Question of the week: How do we buy a home?
Answer: Have a plan and follow the plan.
The plan that I suggest:
Know your ability. The overwhelming majority of homebuyers I have worked with in the thirty-five plus years come to me to get pre-qualified after they have already started looking for their new home.
For some this is not an issue, they are pretty well qualified for the price of the homes they have been looking at.
For others there is not an issue, except they waited longer than they needed to as they did not think they were financially ready to purchase the home they wanted and could have been home owners sooner, possibly for a lower price or same price but a bigger home.
For others there is an issue as they are not quite ready to purchase the home they would like to purchase.
When you first start thinking about purchasing a home meet with a mortgage professional (I know one) to go through your current financial situation and ability to purchase a home. You may discover you are ready to buy today, you may discover that you need to wait a while to accumulate more funds for the purchase, payoff debt, improve credit score, wait for increase in income that is expected.
If you need to do some work, the sooner you are aware of the goal you need to attain to be ready to buy a home.
You cannot start the pre-qualification process too early.
Know what you want to buy. Regardless of the home price, know what you would like in a home. A simple process that I have suggested to home seekers over the years is to write it down.
My suggestion, for a couple purchasing a home, is for each to go to a separate room, be completely selfish, and write down the three things you must have, or really, really want in your new home. This is not a laundry list; these are three things that are by far the most important. For instance, must be in a certain school district, must have multiple full bathrooms, must have separate laundry/utility room.
Then write down no more than three things that if there is a deal breaker and you will not buy the home. For instance, on a busy street, has a flat roof, at the bottom of a hill.
When finished compare lists. If one person has something on their “must have” list that is on the other’s “cannot have” list, it is better to know before you start looking that wandering into a home that one person wants to buy and the other does not. Discuss the item, be as flexible as you can and come to an agreement. You do not want to purchase and live in a home that one party starts their home ownership with resentment.
Get a professional. Yes, Zillow has all the homes listed so you can visually tour them, know the asking price, see if it is something you would like to buy. However, Zillow cannot work with you and your “must have” “can’t have” lists, know the neighborhoods, schools, etc and give you insight that can be valuable.
Find an agent that you feel comfortable with, that you know will work for you to find the home that fits your price range and needs. And most importantly, will communicate with you honestly.
Be realistic. The last sentence above is important. Also important is you must listen and understand that honesty. You want a four bedroom, three bath, formal dining room with a pool based on your “must have” list. Having already been pre-qualified for your purchase price range, your agent knows it is not available in the neighborhood, area, region where you want to buy.
What and how does your agent relate this information to you? Do they say, “no problem something will come up?”
Or, “this is a problem as the home you want cannot be purchased within price range and area you want to live. Do you want to consider a different area? We can take a look at the homes, location and distance you may have to travel for work? Or we can look at the homes available in your price range and see if they will work for your family?”
If the first response is what you get, expect to either wait a long time to find a unicorn home go on the market—likely with many bidders, or more likely after too long of a wait decide you must move on and change location or home amenities. At which point prices may have risen further.
If the second response, do both. Look at homes that are smaller, have less amenities in the area you want. As well, look at homes similar to what you want in different areas, see what commutes may be, the schools, the neighborhoods and surrounding stores, shops, etc, and the “feel” of the area.
Living in Long Beach, we know first hand that for many, many years, and still for some, Long Beach had a bad reputation for many people in the region for its past. This included many agents from other areas who would not show homes in Long Beach due to their predisposition; unfortunately, many of their clients over the years could have gotten more for less.
The same is true today for many other areas in Southern California, and across the state.
Be realistic as to what you budget can afford. Maybe you need to move areas, get a smaller home, or buy a condo to get started then working to be able to buy “the one” in the future.
How do you buy a home? Be prepared, use a professional, be realistic.
To schedule an initial meeting by phone or Zoom, click here for my calendar, please feel free to forward to a friend or family member!
Have a question? Ask me!
Rates for Friday February 23, 2024: Very little economic news this week that impacts rates. We saw a spike mid-week due to U.S. Treasury auction on long term bonds, but rebounded strongly today resulting in 30-year conforming dipping after last week’s increase.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.50% Down 0.125%
30-year high-balance conforming 7.25% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
I very rarely get political in the personal section of the WR&MU. Today after getting multiple mailers in the mailbox, having endured several ads while watching Jeapordy! and M*A*S*H re-runs, I have to break my rule.
These are our choices? For a multiple of reasons that have aggregated over many years, decades, we are bereft of candidates who are not pandering to one end of the spectrum or the other and ignoring the vast majority who are a bit of one “side” on some issues, and some of the other “side” on other issues. Politics has always been nasty, brutal and divisive—go see “Hamilton” or read some pre-Civil War history. But has it always had such a plethora of electeds and candidates who just seem to be not nice or good people?
Every year we hear complaints of low voter turnout, it’s not the opportunity to vote that is keeping people from casting their ballots, it is what is on the ballots.
End of rant, thank you for indulging me.
Have a great week,
Dennis
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog
