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CA first time buyer
I am feeling very overwhelmed right now. 2 years ago DH and I got pre-approved for a home loan. We could have bought then but felt we would be a little to house poor. So we decided to wait. 2 years is loads of time but our savings has gone up and down more than a roller coaster.
We are determined this to really focus on making home ownership a reality. I know we would be approved again for a loan but this time we are waiting til Summer 2013 to get serious about getting approved and looking at house. I am watching the market and know what we need to get into savings (it really shouldn't be a problem).
What other research/reading should I be doing now? I feel like fear, lack of knowledge, and money really made us hold back 2 years ago (not that I am sorry we held back) BUT we really feel like the market is starting to bounce back in our area (just a little) and we would like to be settled before the boys start school (they wont start until they are turning 6 thus giving us the time).
Re: CA first time buyer
Keep up to date on the market. Things could change a lot between now and summer 2013. We bought our home in October 2009 and things have changed since then - underwriting requirements, GFE preapprovals, everything.
I would watch homes in your desired neighborhoods to track the values and prices over time. Do you guys have a list of needs/wants in your new home? If not, I'd start there - what are your dealbreakers? What are things you hope to have but will settle for not having? Have you visited any open houses to get a feel for floorplans and features you like? Have you driven around your target neighborhoods at different times of the day and week?
I'd keep an eye on this board, to see what other homebuyers are going through and what problems they run into and questions they have.
Get your financial business in order and keep it tidy for when you are ready to buy. What's your budget? What's your down payment? How much have you planned for closing costs? What, if any, lifestyle adjustments are you willing to make in order to purchase your home?
Check your free annual credit reports at freecreditreport.gov. You'll have time to clean up any errors or negative items between now and when you buy.
It's scary, all the information you have to process. I keep my eye on the RE sections of news sites and lurk here and am surprised at all the information I've absorbed just by continuing to read.
read how to buy a house in california put out by nolo publications. it explains the entire process pretty in-depth with california-specific information. it frequently mentions norms in our markets and will even spell out distinctions between northern and southern california as things are done slightly differently.
follow the market using redfin. i've found it a lot more comprehensive and easier to use than zillow or trulia for our market. it looks like they have coverage in norcal/bay area, too. you can sign up for a daily email with updates for a certain area/size/price point/other search parameters. these emails give you new listings, updated/changed listings, and sold properties for each day. they also have summaries of market activity for specific cities or zip codes. read those periodically. each property listed has a list of [computer-generated] comps, so look at those. those along w/the properties being sold that you see in the daily update emails should give you a good idea of prices & per square foot prices for what you're looking for in your area.
the daily alerts might be slightly overkill for you at this point, over 1 year out from when you're planning to buy, but if you have 5-10 mins. a morning to go through listings, i find it's the easiest way for me to track the market daily.
mh also follows the real estate blogs of the major local papers in our area. once we understood what all the terms meant from reading the aforementioned nolo book, following the blogs have helped us follow what's going on and the predictions of these writers. they're just predictions, but reading their reasoning behind it has helped us in our understanding of our local market.
ETA: drive, walk, or otherwise familiarize yourself with the neighborhoods you think you might want to buy in. visit at different times to see the character of the neighborhood during the day vs. at night, etc.
Start by getting in control of your money.
You say that savings should not be a problem,. but somehow it doesn't happen. WHY?
Start by tracking your spending to the dollar for a month or two. THen establish a budget.
Savings is a line item you pay first before you pay any other bill, not something you pay out of what is "left over".
If you have debt - read Total Money Makeover by Dave Ramsey
If you need to set up a budget - read Smart Couples Finish Rich y David Bach
Housing shoud be 25-27% of your TAKEHOME pay . That includes Mortgage+PMI+Insurance+Takes+Utilities. MOre than that can make you feel house poor.
Save for your downpayment, closing costs, moving costs, start up costs, repair/renovation costs, decorating & furniture/appliances and yard items and tools. Have an emergency fund of 6 month's expenses in place for the unexpected events in life --- lay offs, illness, furnace dies, roof leaks etc.
Read 2 Dummies books. House Buying for Dummies and Mortgages for Dummies
Make a list of your NEEDS and a list of wants. Know the difference and where/what you are willing to compromise on.
not sure how expensive stockton is, but this may be difficult in many california markets. right now, we're aiming to stay under 30% in a HCOL area, but i've heard you can go up to 35% in VHCOL markets. 35% would make us feel pretty house poor.
almost everything in these 2 books is covered pretty well in the one nolo one i recommended. mh and i read all three, but if you only have the patience for one, i recommend the nolo one since it gives state-specific information. all three pretty much reinforced each other and gave similar information.
Stockton has been in the top 10 foreclosure cities for the past few years. If you're planning to stay in Stockton, do some serious research on how that might affect you. Funding for public services (education, fire, police, etc) has greatly decreased. That said, prices are so incredibly low, it might an excellent time to get into the market.
Check out neighborhoods you like. Drive through at different times of day/evening. Check out the local schools.
Ditto PPs in regards to getting your finances in order. Make a budget as if you have already purchased the house, and save the difference. Once you do purchase, you should have a good amount saved and will be used to the budget. You could also talk to a local mortgage broker to get some specifics on the financial pieces.
Hi there,
Good for you for waiting, saving and trying to learn as much as you can. I know the waiting can be hard but it sounds like you & dh made some good decisions.
The posts above had some really great advice, as always! I'm a Realtor in the Bay Area so I thought I'd offer some thoughts too. I know that stepping into buying a home can be really overwhelming, not only is a financial decision, it is an emotional decision too. It is so layered. Surrounding yourself with experienced and trustworthy people will help you a great deal.
Finding a Realtor: I highly recommend getting referrals from friends and family. Also, I think visiting open houses is a great way to meet active Realtors and to get to know them in a casual setting. Ask about their experience and their opinion of the market. These two topics are a great place to start. Designations are a way for Realtor to advance their expertise and show their dedication to the profession. The most well known and well respected are: Certified Residential Specialist (CRS, www.CRS.com), Accredited Buyers Representative (ABR) and there is also the Certified Distressed Property Expert (CDPE).
Finding a Lender: Again, asking for referrals is great. You can work with any lender you choose (not just a bank you have an account with). A mortgage broker can originate a loan for you through a variety of providers (ie BofA, Chase, Wells etc etc). Where as a bank will sell you only their products (ie if you go to BofA, they will only sell you a loan through BofA). Personally, I prefer a mortgage broker. There are fees that the mortgage broker will earn but I believe they more than earn that based on what they can save you in finding you the best rates etc. Also, every Realtor will have a suggestion regarding which lender to use. When I recommend a lender it is based on my past working experience with them and I know them to be professional and able to act as promised. I am wary of 'in-house' lenders as I believe that often they are referred only because they are 'in-house' and not entirely on their merit and competitve terms.
Other thoughts: Your Credit - I cannot emphasize enough how important it is to have strong credit. The higher your credit score, the lower your interest rate will be on your loan - saving you thousands!! Even if your credit is not perfect, you have lots of time to improve it. Even if you can't pay things off, you can improve your credit. Just making payments on time every month can greatly improve your score. Other things that effect a credit score are: maturity of accounts, number of accounts, liens, judgements, late payments, balance owed vs credit limit etc
Don't trust Zillow on their estimates. Their info on the recent sales is often 'ok' but should always be verified. They include all transfers, not just sales, so if there is a sale between spouses (at a fraction of fair market value), the number is included and throws off their estimates, for instance.
Start visiting online sites to search the MLS. Watch! Visit open houses. Get to know neighborhoods, schools etc. You can look up the scores and stats for any school through the Ca Dept of Ed, www.cde.ca.gov.
I know I've spewed out a lot of information here, I hope it helps some. If you would like to chat (by phone or email etc), I'd be happy to talk with you and answer any questions you may have about buying, the process, loans, Realtors etc. I am glad to share my expertise with my fellow Nesties
Most of all, keep up the good work and have fun!
Best of luck, Baidra
Baidra at ProchnowRealtors dot com
Lighthouse State Beach, Santa Cruz.
Hi, you've received some really good advice but I'll emphasize savings and credit as well. It's always more expensive than you think it is. I would also start going to open houses on the weekends. It can be really fun, you will start to see what neighborhoods you like best and everything is different in person.
Good luck.