First-Time Homebuyer Mistakes to Avoid
Buying your first home is one of the most exciting decisions you’ll make in your life! It comes with a lot of responsibility, but a lot of excitement too. Before you jump in and buy your first home, know the most common first-time homebuyer mistakes people make.
Not Getting Pre-Approved
The pre-approval is like your ticket to homes for sale. Sellers want that piece of paper that says ‘yes, they are approved to get financing.’ Getting pre-approved is easy and it makes sellers much more willing to consider your bid.
What to do: Find a lender and get pre-approved. Get quotes from a few lenders (three is a good number) to find the best offer. CLICK HERE FOR OUR HOME LOAN QUALIFIER
Spending too Much on a Home
It’s tempting to want the very best (and we want that for you too) but buying more than you can afford only creates financial problems. Just because a bank says you qualify for a certain amount doesn’t mean you have to spend that much.
What to do: Before you buy a home, play with the numbers. See how a mortgage payment fits into your budget. Don’t be afraid to borrow less than you qualify for.
Not Leaving Money in your Savings Account
Putting everything you have down on a home leaves you without a cushion. What happens when the A/C breaks or there’s a plumbing leak? When you own a home, you’re responsible for the maintenance and repairs. It’s an eye-opener when that first repair hits.
What to do: Leave some money in your savings account as a buffer, especially if you can’t contribute to your savings for a while after buying a home.
Ruining your Credit before you Close
Lenders pull your credit a couple of times during the loan process. They pull it during the pre-approval process, sometimes again during underwriting (if more than 60 days pass from the pre-approval date) and again before closing. If you hurt your credit score during this time, you could lose your approval.
What to do: Keep your credit as stable as possible. Keep paying your bills on time, don’t apply for new credit, and don’t use your credit cards.
Making Large Deposits in your Bank Account before Closing
Lenders source every deposit on your bank statement. They track where the money originated to ensure you didn’t borrow it. If you suddenly have large deposits on your bank account, it could delay underwriting and even cause you to lose your loan.
What to do: If you have large deposits, wait until they are in your account for at least 2 months before applying for a mortgage. Lenders consider funds in your account for 2 months ‘seasoned’ and they usually don’t source them then.
The more time you spend preparing for your first home purchase, the easier the process goes. Finding a home is the fun part, but qualifying for financing and finalizing the transaction requires careful planning and avoiding the top mistakes first-time homebuyers make.
Selling Your House As-Is
If you want to sell your home without doing any repairs, you’re looking at an ‘as-is’ sale. While it may seem more convenient at the time, it’s important to know what it means for the buyer and what it does to your chances of selling the home.
What Does it Mean to Sell a Home As-Is?
Before you sell a home as-is, it helps to know what that means. No home is perfect, so not every home is an as-is sale. Common issues that make it an as-is sale include:
- Foundation cracks
- Mold in the home
- Leaky roof
- Termite damage
- Plumbing issues
- Electrical issues
- Title issues
If your home has any of these issues (or other major issues) and you don’t want to fix them, it’s an as-is deal. Here’s what it means for the buyer.
Buyers Want a Deal
Buyers won’t pay the true market value for a home sold as-is. Instead, they want a below market value knowing they will need to make repairs to fix up the home. Many buyers of as-is homes are investors who fix and flip homes, but not always.
Buyers May Have a Harder Time Securing Financing
If a buyer needs financing, they may have trouble getting approved. Most buyers of as-is properties are cash buyers, meaning they don’t have to worry about a lender or loan approval. Sometimes, though, if the issues aren’t ‘serious’ the home may pass an appraisal and traditional lending is still an option.
Buyers Want a Disclosure Report
You must disclose that you’re selling the home as-is in the listing, but that’s not all. They’ll want you to disclose everything that’s wrong with the home before they buy it. This helps them make a decision and protects you from the buyers backing out after signing the contract, especially if they have an inspection contingency on it.
Buyers Will Negotiate
If you want to arm yourself with the right information, have your home inspected before you put it on the market. This does two things:
- Tells you what is wrong with the home before you list it
- Gives you time to get quotes from contractors so you know the accurate price of repairs
When buyers negotiate, you’ll be more informed. You’ll know exactly how much potential repairs would cost so you know which offers are legit and which are lowballing you when you receive offers.
Should you Sell your Home As-Is?
Every seller is different. Think about your reasons for selling your home without repairing it. Are you in a hurry? Do you not have the funds? Do you just not want to be bothered?
I can help you decide if selling your home without repairing it is the right choice. We’ll discuss your options, find out how much your home may cost to improve, if the issues aren’t too extensive, and determine what you might lose if you skip the repairs and sell the home as it stands.
Most homebuyers realize that they can’t expect a perfect home inspection report when buying a resale home. Cosmetic flaws and minor repairs are easily managed and shouldn’t be deal breakers. That said, there are some issues that are more serious and should give the buyer pause if not addressed adequately.
1. Leaky and Rundown Roofing
Watch for signs of current or past water damage.
2. Poor Drainage
Drainage issues can cause serious damage to the home foundation, siding, and basements.
3. Foundation Issues
Signs of foundation problems can include cracks around doors and windows or uneven floors. Foundation problems can cost thousands of dollars to correct.
4. Plumbing Problems
Major plumbing issues should be considered carefully and further explored.
5. Pest Infestations
Termites and other wood-eating pests can cause extensive damage that can be hard to find and costly to repair.
That “musty” smell could be due to hidden mold and further investigation should be taken as mold can be dangerous to the health of the family. Depending on the type of mold, it can be very difficult to remove entirely.
7. Faulty Heating System
A malfunctioning furnace can be a fire hazard.
8. Electrical Wiring
Faulty wiring can cost thousands of dollars to repair.
9. Structural Damage
Sagging joists, rafters, and door jambs can be evidence of larger issues.
A home in poor condition could be hiding more serious issues due to chronic neglect.
*Homebuyers should be alert to these issues and know the costs to repair before concluding the sale. Home sellers should address these issues before putting the home up for sale to ensure they get the best possible sales price.
Good news! Fannie Mae just released new loan limits for 2021. This will definitely open up the doors for more home buyers next year. Curious to see if you can qualify for a home mortgage? Try our Home Purchase Qualifier tool. CLICK HERE
Below are the list of the new SoCal loan limits for 1-4 units.
L.A. and Orange County
1) One Unit (SFR/Condo) $822,375
2) Two Units $1,053,000
3) Three Units $1,272,750
4) Four Units $1,581,750
Riverside & San Bernadino County
1) One Unit (SFR/Condo) $548,250
2) Two Units $702,000
3) Three Units $848,500
4) Four Units $1,054,500
San Diego County
1) One Unit (SFR/Condo) $753,250
2) Two Units $964,300
3) Three Units $1,165,600
4) Four Units$1,448,600
1) One Unit (SFR/Condo) $739,450
2) Two Units $946,650
3) Three Units $1,144,250
4) Four Units $1,422,050
Elegir comprar una casa no es algo que deba tomarse a la ligera, por eso es esencial obtener una aprobación previa. Es una decisión importante que puede afectar significativamente la vida de uno. Hay muchos pasos que se deben seguir para completar el proceso.
Uno de los pasos más importantes es obtener una aprobación previa para un préstamo hipotecario. Si bien no siempre es un requisito, muchos expertos en bienes raíces y préstamos lo recomiendan. Es un procedimiento relativamente indoloro que solo debería llevar uno o dos días como máximo.
Comprar una casa en California puede llevar algún tiempo. Obtener una aprobación previa para un préstamo puede hacer que la experiencia sea un poco menos estresante. Aquí hay algunas razones por las que obtener una aprobación previa es esencial:
1. Sabrá cuánto puede pedir prestado.
Una de las principales razones para obtener una aprobación previa para un préstamo hipotecario es para poder determinar cuánto puede pedir prestado. De esta manera, no terminará buscando propiedades que sean más de lo que realmente puede pagar. Esto puede hacer que se enamore de una propiedad que, en última instancia, está fuera de su rango de precios y podría hacer que todas las demás casas en su rango de precios se sientan mucho menos deseables.
A pesar de que es posible que tenga una aprobación previa para una cantidad específica en dólares, no significa necesariamente que deba buscar propiedades que tengan un precio de ese precio máximo. Recuerde que deberá apartar fondos para el pago inicial, los costos de cierre, el seguro de propietarios, los servicios públicos mensuales y otros cargos relacionados.
¡No se olvide de los pagos del automóvil, las facturas del teléfono, los alimentos y otros gastos regulares! Después de obtener una carta de aprobación previa, es una buena idea revisar sus ingresos y gastos y establecer un presupuesto para usted. Mire todo línea por línea. Si hay cargos innecesarios o redundantes, ahora es el momento de eliminarlos.
Si tiene deudas con tarjetas de crédito u otros préstamos u obligaciones financieras, debe cancelarlas o pagarlas tanto como sea posible. Esto ayudará a mejorar su puntaje crediticio. Debe comenzar a apartar fondos de cada cheque de pago para alcanzar su objetivo de ser propietario de una casa.
2. Tendrá una ventaja sobre otras partes interesadas.
Obtener una aprobación previa para un préstamo también puede brindarle una clara ventaja sobre otros que no lo han hecho. Una carta de aprobación previa les dice a los vendedores que un prestamista calificado ha revisado personalmente sus finanzas y ha decidido que puede comprar una casa. Esta información puede dar a los vendedores confianza en usted, porque saben que es muy probable que su préstamo sea aprobado.
La mayoría de los vendedores de viviendas no quieren negociar con personas que no tienen sus finanzas en orden o que de otro modo podrían considerarse riesgosas. Es por eso que obtener una aprobación previa es una de las primeras cosas que debe hacer. Incluso podría ayudarlo a comprar una casa más rápido.
3. Puede identificar cualquier posible error en su informe de crédito.
Cuando se reúna con un prestamista, revisará sus ingresos, gastos y deudas actuales. También revisarán su crédito. Aquí es cuando es más probable que surjan problemas potenciales.
Si hay algún error o inexactitud en su informe de crédito, debe trabajar para resolver esos problemas de inmediato. Si no lo hace, podrían evitar que se apruebe previamente. Su sueño de ser propietario de una vivienda podría desvanecerse justo cuando se inicia el proceso.
Para obtener una aprobación previa para un préstamo, deberá proporcionar documentación para los siguientes elementos:
– Información de ingresos y empleo (formularios de impuestos, recibos de pago, etc.)
– Cualquier deuda o pasivo actual (préstamos para estudiantes, préstamos para automóviles, etc.)
– Cuentas corrientes, de ahorro, jubilaciones y otras cuentas bancarias
– Cualquier propiedad que posea actualmente
– Cualquier activo adicional que posea
– la información de contacto de su empleador
El prestamista revisará toda esta información. Ellos le informarán si se necesita documentación adicional y luego determinarán si emitirán o no una carta de aprobación previa.
Una vez que haya sido preaprobado, puede comenzar a buscar casas que pueda pagar. También puede comparar préstamos hipotecarios en diferentes instituciones crediticias. Mire cada oferta detenidamente y no dude en hacer preguntas si no comprende algo o necesita aclaraciones sobre elementos específicos. Asegúrese de leer el contrato detenidamente antes de aceptar un préstamo hipotecario en particular.
Por lo general, las cartas de aprobación previa solo son válidas durante 30 a 90 días. Si la búsqueda de su casa va a llevar más tiempo que eso, es posible que desee obtener varias letras. Esta es una salvaguarda para que pueda concentrarse en encontrar la casa que mejor se adapte a sus necesidades.
Solo tenga en cuenta que una carta de aprobación previa no garantiza que será aprobado para un préstamo. Aún se le podría negar por varias razones. Su situación financiera también podría cambiar. Cualquier deuda adicional, pérdida de un trabajo u otros factores podrían afectar su capacidad para obtener un préstamo hipotecario.
Un préstamo es una obligación seria y debe tratarse como tal. Por eso es importante leer los detalles del contrato hipotecario para comprender completamente sus responsabilidades. Una vez que haya sido aprobado para un préstamo hipotecario y cierre una casa, tómese unos minutos para volver a examinar el contrato hipotecario. Es posible que desee agregar los montos del pago de la hipoteca y las fechas de vencimiento en su calendario para no olvidarlo.
La aprobación previa es tan necesaria como todas las demás partes del proceso de compra de una vivienda. Las únicas excepciones son si está construyendo nuestra casa, ya ha sido aprobado para un préstamo o si tiene la intención de pagar su casa de una vez por adelantado. Todo lo que necesita es proporcionar algunos documentos financieros e información laboral a su prestamista. Deberían tener una decisión para usted en uno o dos días.
Una vez que haya sido preaprobado, puede comenzar a buscar casas. Programe una reunión con un agente de bienes raíces para discutir sus intenciones. Hágales saber que ha sido preaprobado para un préstamo para que puedan comenzar a encontrar casas para las que calificaría. Cuanto antes se ocupe de esto, más cerca estará de ser dueño del tipo de hogar que siempre ha deseado.
Choosing to buy a home isn’t something that should be taken lightly that’s why getting pre-approved is essential. It’s a major decision that can significantly impact one’s life. There are a lot of steps that need to be taken to complete the process.
One of the most important steps is getting pre-approved for a mortgage loan. While it isn’t always required, it is recommended by many real estate and lending experts. It’s a relatively painless procedure that should only take a day or two at most.
Buying a home in California can take some time. Getting pre-approved for a loan can make the experience a little less stressful. Here are some reasons why getting pre-approved is essential:
1. You’ll know just how much you can borrow.
One of the biggest reasons to get pre-approved for a mortgage loan is so that you can determine how much you can borrow. This way, you won’t end up looking at properties that are more than you can realistically afford. This can lead to you falling in love with a property that is ultimately out of your price range, and could make all other houses in your price range feel a lot less desirable.
Even though you may be pre-approved for a specific dollar amount, it doesn’t necessarily mean that you should look for properties that are priced at that maximum price point. Remember that you’ll need to set aside funds for the down payment, closing costs, homeowners insurance, monthly utilities and other related charges.
Don’t forget about car payments, phone bills, groceries and other regular expenses, either! After obtaining a pre-approval letter, it’s a good idea to review your income and expenses and set a budget for yourself. Look through everything line by line. If there are any unnecessary or redundant charges, now’s the time to cut them.
If you have credit card debt or other loans or financial obligations, you should either pay them off or pay them down as much as possible. This will help to improve your credit score. You should start setting aside funds from each paycheck to go towards your goal of owning a home.
2. You’ll have an advantage over other interested parties.
Getting pre-approved for a loan can also give you a distinct advantage over others who haven’t. A pre-approval letter tells sellers that a qualified lender has personally reviewed your finances and have decided that you can purchase a home. This information can give sellers confidence in you, because they know that your loan will more than likely be approved.
Most home sellers don’t want to negotiate with people who don’t have their finances in order or could otherwise be considered risky. That’s why getting pre-approved is one of the first things that you should do. It could even help you buy a home quicker.
3. You can identify any possible errors in your credit report.
When you meet with a lender, they will review your current income, expenses and debt. They will also review your credit. This is when any potential problems will most likely arise.
If there are any errors or inaccuracies on your credit report, you should work to resolve those issues immediately. If you don’t, they could prevent you from being pre-approved. Your dream of home ownership could fade away just as the process was getting started.
To get pre-approved for a loan, you’ll need to provide documentation for the following items:
– Income and employment information (tax forms, pay stubs, etc.)
– Any current debt or liabilities (student loans, car loans, etc.)
– Checking, savings, retirement and other bank accounts
– Any property that you currently own
– Any additional assets that you own
– Your employer’s contact information
The lender will review all of this information. They will inform you if additional documentation is needed, and then make a determination as to whether or not they will issue a pre-approval letter.
Once you’ve been pre-approved, you can start researching homes that you can afford. You can also comparison shop for mortgage loans at different lending institutions. Look at each offer carefully and feel free to ask questions if you don’t understand something or need clarification on specific items. Make sure that you read the contract carefully before agreeing to a particular mortgage loan.
Pre-approval letters are typically only valid for 30 to 90 days. If your home search is going to take longer than that, you may want to get multiple letters. This is a safeguard so that you can concentrate on finding the home that best meets your needs.
Just keep in mind that a pre-approval letter doesn’t guarantee that you’ll be approved for a loan. You could still be denied for various reasons. Your financial situation could also change. Any added debt, loss of a job or other factors could affect your ability to secure a mortgage loan.
A loan is a serious obligation and should be treated as such. That’s why it’s important to read the details of the mortgage contract so that you fully understand your responsibilities. Once you’ve been approved for a mortgage loan and close on a home, take a few minutes to re-examine the mortgage contract. You may want to add the mortgage payment amounts and due dates on your calendar so that you don’t forget.
Pre-approval is just as necessary as all of the other parts of the home buying process. The only exceptions are if you’re building our home, have already been approved for a loan or if you intend to pay for your home all at once up front. All you need to is to supply a few financial documents and employment information to your lender. They should have a decision for you in a day or two.
Once you’ve been pre-approved, you can start looking at homes. Schedule a meeting with a realtor to discuss your intentions. Let them know that you’ve been pre-approved for a loan so they can start finding homes that you’d qualify for. The sooner that you take care of this, the closer you’ll be towards owning the kind of home that you’ve always wanted.
Escrow is an important part of the home buying process and today we’ll share 10 habits of a successful escrow. An escrow account is established for home buyers once they’ve made an offer on a home and the offer has been accepted. The buyer will then need to make a deposit, also referred to as earnest money, to the seller. Those funds are then placed into an escrow account until closing.
Once the closing has been finalized, the money in the escrow account will then be released. This money is usually returned to the buyer so that they can apply it towards their down payment or closing costs. The amount that’s required to be entered into most escrow accounts is usually around one to two percent of the sale price that’s been agreed upon.
Buying a home in California is frequently done with an escrow. Here are a few things that you should and shouldn’t do to maintain a strong escrow:
1. Get pre-approved for a mortgage if you haven’t already
Being pre-approved for a mortgage gives you a significant advantage when it’s time to look for houses. A lender will review your employment and credit history and then issue an approval letter stating amount they are willing to lend you. You’ll know what homes are in your price range, and you may be able to buy a home sooner than others who haven’t been pre-approved yet.
2. Set reasonable expectations for your home search
When it comes to searching for the ideal home, sometimes the sky’s the limit. However, you still have to keep your expectations realistic. Don’t try to buy a home that’s more expensive than you can actually afford. You may have to go without a few amenities on your wish list, or look for properties that are a little farther away from your ideal location.
3. Have your documents in order
When you meet with your lender, they may ask you for copies of pay stubs, tax returns and other documents for proof of income and employment. You should have these items readily available. If you don’t, take some time before meeting with them to ensure that you have everything that you need.
4. Don’t make any large purchases in the meantime
It may be tempting to splurge on a few luxuries once you’ve been pre-approved for a loan. However, this is something that you should definitely avoid. It may put you into debt, and it could hamper your ability to cover the down payment, closing costs and other associated expenses. Large purchases may cause the lender to scrutinize your loan request, and they may even have reason to disallow or deny it in certain situations.
5. Have a strong negotiator on your side
If you’re not assertive enough, you may want to have your realtor or another qualified expert at your side. You need to stand up for your rights in a home sale. Don’t let a buyer persuade you to buy the home for a higher price, skip the home inspection or do anything that could otherwise put the sale in jeopardy. Express your concerns about any repairs or renovations that need to be made and have a thorough discussion about which party will be responsible for them.
6. Ensure that all necessary inspections are performed
In many property transactions, a home inspection, home appraisal, and sometimes a land survey are required. Follow the rules and regulations in your area and make sure that no mandatory inspections are missed. You can work with your realtor and the seller to ensure that these tasks are performed in a timely manner. You should attend the home inspection, and you may attend the other inspections if you wish.
7. Communicate at all times
Communication is an essential part of any home sale. Stay in constant contact with your real estate agent, the seller, title agent, inspector and anyone else that will be involved in the process. Be ready to answer questions or provide additional documents if necessary. Express any concerns that you may have and don’t be afraid to ask questions as they arise.
8. Keep all of your active accounts current
Your finances should be in good standing while you’re working to buy a home. All bills should be paid on time. If you have any other outstanding loans or debt, now is the perfect time to pay them off or pay them down as much as you can. You may also want to set a budget for yourself. Review your current income and expenditures to see if there are any unnecessary or redundant items that can be eliminated. Set aside a certain dollar amount from each paycheck for your your down payment and other fees, such as closing costs, title searches, homeowners insurance and monthly utilities.
9. Don’t apply for credit with other lenders
Applying for credit cards, loans or other forms of credit with other institutions can raise a few red flags. It may make your lender question your intentions. It can also create too many inquiries into your credit history. These requests may even reduce your credit score.
10. Don’t co-sign for others
If you co-sign for a loan or other obligation for another person, you could be held liable if they default. This can also negatively impact your credit. If someone asks you to co-sign for them, kindly decline and calmly explain to them the reasons why you can’t honor their request at this time.
These are just some of the many things to watch for while you’re in escrow. The escrow process typically takes anywhere from around 30 to 60 days to complete or more, depending on circumstances. Most escrows shouldn’t take much longer than 30 days to complete.
Staying calm and using common sense are essential for enduring an escrow. Keep in mind the fact that you’ll be a homeowner soon. It’s an important responsibility that shouldn’t be taken lightly. The escrow will expire before you know it, and you’ll be a homeowner! You can look forward to spending many days in the type of residence that you’ve always wanted.