Prepare to Buy
- Calculate your monthly income and debt including all living expenses to target the max you can afford for a mortgage payment
- Check your FICO Score and focus on quick fixes to improve your overall score (i.e. pay down credit card, clear any errors, etc.)
- Determine your needs versus nice to have
- Narrow down targeted locations that fit your budget and needs
- Hire an Agent that knows your areas of interest; do not use the seller’s agent as they do not have your best interest
- Know the mistakes to avoid during the home purchase process
Financing
- Get Pre-approved for a mortgage. Make sure to shop for the best interest rate by speaking to at least three lenders.
- Review all paperwork requirements and timely submit in order to ensure timely loan approval
- Review estimated to ensure you are comfortable with the total costs to close (down payment plus closing costs)
Viewing Homes
- Track and analyze each home you view against your must have and wish list items with a home viewing checklist in order to review later
- Evaluate seller motivation and any issues with the home
- Get a sense for the location and direction the home faces, neighbors, noise, proximity to amenities crime, sex offenders, air pollution, etc.
- Review MLS information and confirming the accuracy
- Be ready to make an offer, especially in a hot market
Making an Offer
- Review the contract in detail with your agent
- Be comfortable with the price and terms you are agreeing to
- Understand the timeline and ensure it fits with your schedule and goals
- Include an offer letter to help differentiate you from other buyers
Escrow and Closing
- Open escrow and separately verbally confirm wiring instructions to escrow
- Send purchase agreement and other documents to lender and have them schedule appraisal with listing agent
- Schedule home and pest inspections
- Real Estate Transfer Disclosure Statement – Seller is required by law to provide you with any known defects or issues
- Home and pest inspection reports – review for issues and request repairs on major issues; be sure that the home inspector is licensed and experienced
- County assessor records – this will disclose the home value for property tax purposes, the actual square footage, any permits for improvements, etc.
- Title report and Commitment to title insurance – ensure there are no liens or encumbrances and that the title policy insures against liens (i.e. unpaid taxes), encumbrances, etc. Discuss the insurance options with your title company; cost of insurance can be found at www.insurance.ca.gov
- Home Warranty Policy – Buyers should request the seller provide and pay for a home warranty policy. For between $250 and $1000, a home warranty policy will cover the cost of repairing, or replacing, major home systems (plumbing, heating, electrical, etc.) and appliances (garbage disposal, stove, oven, water heater, etc.). For an additional cost, additional coverage for air conditioning, pools, spas, washer and dryer, and even roofs can be added.
- HOA documents (if applicable) – review for the following:
- Three most recent years of HOA payments and what annual increases have been
- There are no special assessments against homeowners (occurs when HOA is underfunded and can range from $1,000-$10,000)
- There are no lawsuits pending against the association
- There are no delays in repairs and maintenance
- HOA finances and minutes – ensure the HOA is well-funded with sufficient reserve and minutes don’t reveal any major issues
- Review covenants conditions and restrictions (CC&Rs) to ensure you are okay with the rules
- Insurance – review what the HOA covers in terms of insurance (i.e. earthquake, all exterior of building), usually the homeowner pays insurance for inside of the building or walls they own)
- Maintenance company – who maintains the property, what is their reputation, are they responsive
- Issue request for repairs based on review of home inspection and/or pest inspection; upon satisfaction, remove contingency
- Review appraisal and clear contingency or negotiate with seller if outside of expectation
- Obtain final loan approval and clear remaining contingencies
- Final walkthrough – perform final walkthrough of property to ensure it is in same condition based on your initial viewing and home inspection
- Loan Documents and Closing Disclosure – review final loan docs in detail with lender before signing, including comparing your closing disclosure statement against the pre-approval
- Wire final deposit to escrow (ideally day before closing)
- Escrow appointment to sign all final paperwork
- Grant deed recorded and you now own your home
Moving
- Schedule movers
- Set up utilities
- Change of address
- Schedule vendors as needed – painting, carpet cleaning, home cleaning, contractor, etc.