Buying a home for the first time in life is a once-in-a-lifetime experience. People have a lot going on in their minds about how they want their first home to be. Homes are considered one of the most expensive purchases in a person’s life. It is normal for you to rethink the question; should I buy a house now in California
When you think that you are ready to buy a home, make sure if is it a good time to buy a house in California. There is a whole multi-step process that you will need to go through in order to convert that dream house into a reality.
If you are wondering how to buy a house in California first-time buyer here is a complete guide to help you through the process;
Before you actually buy a house, you need to prepare yourself financially and mentally. Buying a house means viewing several houses that can be exciting but at the same time quite stressful. When you buy a new home, that too for the first time, it uplifts your mood and brings a spark of excitement, but only if you manage the whole process smartly.
The main factors that you need to consider and focus are:
· Down Payment
When you plan to buy a house on a mortgage, the first thing you need to provide to the lender is a down payment.
You need to make sure that you can afford to pay the amount without damaging your whole financial budget and disturbing your lifestyle. It would be best only to buy a home when you are financially and mentally ready for the process.
The type of mortgage that you chose depends on your current financial situation. The lender also has a role in deciding the breakdown of your down payment and mortgage. Most banks and private lenders have strict requirements and a loan is only given if you have a healthy monthly income, maintain a good credit score, have a low debt to income ratio, and meet other lifestyle expenses easily.
The standard amount of down payment is 20% of the sale value of the house. However, government-backed loans such as FHA (Federal Housing Administration) and VA (Veterans Affairs) allow considerably less down payment up to 3.5%.
You can decide the percentage of your down payment by calculating it. For example, if you want to make a 4% down-payment on 300,000 dollars home, that would be 4% of this total amount.
If you are not yet ready to make the down payment but plan to buy a house eventually, you can calculate it and start saving up the amount.
· Closing Costs
Closing costs are the extra fees and other expenses you need to pay to finalize your mortgage.
Typically, these fees cost around 2% to 5% of your total loan amount.
· Move-in Cost
You also have to keep in mind the move-in costs.
Move-in costs include any repair that you might need to do after moving-in, furniture, moving company payments, etc.
· Calculate your Numbers
Before you go looking for your dream house, you should have a budget plan in your mind, so you know your range and select the house accordingly. Keep your budget breakdown in mind at every step while buying the home, it will save you from over-stressing yourself.
· Credit score
When you put in a mortgage request, various factors decide how much mortgage you will get, and one of them is your credit score.
Your credit score will determine how much interest on your mortgage you will have to pay and also how much mortgage do you qualify for.
Here are some tips to help you get a good deal
Ø Pay your bills on time.
Ø Keep your credit card balance low.
Ø Keep tracking your credit score regularly.
First time Home Buyer’s Eligibility Requirements
If you have not bought and owned a house anytime in the past or at least in the past three years, you are eligible as a first-time home buyer in California, and you can benefit from the several first-time homebuyer programs.
Do your thorough research about first-time homebuyer loan programs operating on government and private levels before you go searching for a house. Go through all the terms and conditions and contact professional and financial advisors if you need any help to understand them.
Some of the most common loan programs are:
First time Home Buyer Loan Programs
There are several programs that allow first-time homebuyers to get houses for sale in Menlo Park CA
· FHA Loans
Many first-time homebuyers benefit from this program. It allows you to buy a home even with low credit scores. The Federal Housing Administration usually allows down payments as low as 3.5% for the people who have a credit score of 580 or higher.
FHA makes sure to provide loans for people who have credit scores of even 500, although a 10% down payment is usually required.
· Conventional Loans:
Conventional home loans, on the other hand, are not guaranteed by the federal government.
· VA Loans:
These loans are offered to the military veterans and their spouses and often do not require any down payment at all.
· USDA Loans:
A USDA (United States Department of Agriculture) home loan offers loans to eligible rural and suburban buyers at zero down payment. The USDA issues these loans through the USDA rural development housing loan program.
Tips for buying a House at a Lower Cost
Compare Mortgage Rates
The consumer financial protection bureau recommends requesting loan estimates for certain types of mortgages from various lenders and keeping an eye on the rate of interests and other fees. This will help you save costs on homes for sale in Menlo Park CA by letting you avoid the excessively high charging lenders.
Be careful while choosing your real estate agents
While you are looking for a real estate agent, take as many referrals as you can. It would be best to take referrals from recent homebuyers in family and friends. Ask them to guide you through the process.
After careful research, when you shortlist your potential real estate agents, talk to them and ask them about their experience, license credibility, and knowledge of the market.
A good agent will have all the necessary information on hand and be willing to search through the market to find the house according to your demands.
Pick a suitable neighborhood
When you are planning in buying a home, it is important to pick the right neighborhood. Pick a community considering your social and religious values and other needs.
Picking the right neighborhood will make it very peaceful and easy for you to settle in the area.
Ask your neighbors about the area and functioning facilities in the area before settling in.
Virtual home tours
Before you physically visit the homes, give a shot at the virtual 3D home tours of Menlo Park houses for sale. These tours can help you shortlist the properties that you want to visit physically and then be able to make a decision.
Get the home inspected:
When you select a house, don’t try to save the inspection cost because it can turn out against you in the long run. Paying some money for a home inspection before buying it can save you from future troubles.
Sometimes there are hidden plumbing and sanitary issues in a property that you might not be able to see on your visits, but the inspection team can expose them if you pay them for inspection.
Home insurance covers the cost of any repair and reconstruction that might be required in the house before you move in and even after. It would be best if you bought enough insurance to cover the cost to rebuild it in case of any unfortunate events like that.
All the above-mentioned tips will help you get a good deal for your first-ever home and make this experience a happy one.