So you are considering buying your first house in the state of California. Getting on the property ladder can be exciting, but it might be stressful, too. After all, buying a home is one of the biggest financial commitments you will ever make.
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Whether you are buying your first house or looking for your first investment property in Sonoma County, it’s essential to understand that the process of purchasing a home is as important as choosing a particular property. Unfortunately, the home buying process is often much more complicated than the average home buyer expects. First-time home buyers have a lot to deal with—from understanding legal jargon to navigating bidding wars.
The following 8 tips for Buying Your First House in California will ensure a smooth home buying process.
1. Gauge Your Financial Health
Making the transition from renter to first-time homebuyer requires a comprehensive evaluation of your financial situation and factoring in the costs involved. Some of the expenses associated with the home buying process include:
Down payment: A down payment is a percentage of the home’s closing price. The average down payment on properties in California is 5.3% of the closing price, but it can be as low as 3.5%.
Closing costs: These include title fees, lender charges, and prepaid costs for home insurance and property taxes. You can expect your closing cost to be around 3% of the house’s closing price, although the actual percentage may vary.
Home inspection costs: Home inspection should be done before you close on a home. In California, the average inspection cost is around $350, but the price will vary depending on the size of the house.
Property taxes: Property taxes are mandatory in California. Homeowners need to pay effective property tax at the rate of 0.81% of the property’s value.
2. Set a Budget
Next, you should figure out what you can afford. An online calculator can help you calculate how much house you can afford.
Generally, you should look for a house that costs no more than two-and-a-half times your annual gross income. If you have financial obligations like credit card debt, you need to lower your sights. The amount of your down payment should also help you estimate how much house you can afford.
3. Get pre-approved
Sellers often won’t accept an offer from you at all unless you have a prequalification or preapproval letter from your lender—so as soon as you hire a realtor, make sure to get pre-approved for a home loan.
Below is a mortgage pre-approval checklist for buying your first house in California:
Healthy credit score: Most lenders require you to have a consistent record of repaying your debts. Mortgage applications require a minimum 620 credit score, but some lenders require a score of at least 640.
Steady source of income: Lenders require you to have a constant source of income to ensure you can pay off your loan on time and in full.
Down payment: A down payment shows that you’re ready for homeownership. It shows you are a serious applicant and able to meet your financial obligations.
4. Research the neighborhood
Before buying a house, make sure you research the location to ensure it has all the amenities and facilities you need. Find out if the neighborhood has amenities such as shops, grocery stores, and various professional services. The availability of good schools should also be on your radar whether you have school-age children or not. Not only does it ensure quality education for kids, but it has a significant effect on home values. So take no chances and do your research first.
5. Be Flexible
No house is perfect, and it’s challenging to find a home with every single item on your wish list. That’s why it’s essential to prepare to make some compromises. So come up with a list of the characteristics you’re looking for and identify the non-negotiable features.
6. Watch Out for Hidden Costs
We mentioned some of the costs associated with the home buying process in point #1 above. However, there are other costs like surveying fees, appraisal fees, and loan processing fees, to name but a few. Make sure to include such costs in your budget to avoid any surprises.
7. Schedule a home inspection
Schedule a home inspection early to ensure you’re making a smart investment. A home inspection protects you by revealing any issues with the home that the seller did not want to disclose. The buyer is responsible for selecting an inspector and scheduling the appointment.
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8. Work with an Experienced Real Estate Agent
Experienced realtors will save you both time and money while purchasing a home. Top realtors know the local area inside out and know how to get the best deal for you. Top realtors know the local area inside out and know how to get the best deal for you, which will reduce stress, and make you better prepared from start to finish.
Hire a realtor or real estate agent today
Buying a house for the first time is very exciting but can also be an overwhelming experience. To simplify the home buying process and call Anita Anderson, the premier real estate agent in Sonoma County and beyond. With her extensive experience in the local housing market, she can help you find your dream home at a price you can afford. Call Anita today!
