1) Get Ready for Home Ownership
- Build a good credit history
- Get a mortgage pre-approval (unless you are paying all cash)
- Save up for a down payment (typically 10-20% of property’s value; if FHA-qualified, then possibly less)
- Consider closing costs which can include taxes, loan and escrow fees
- Consider utilities and other bills, such as property taxes, insurance and HOA fees
2) Find a Real Estate Professional
- Get a referral from friends, family, or work colleagues, or search online for a Realtor with good client reviews
- Ask the real estate professionals you interview about buyer’s representation contracts and agreements, do they work full-time, what is their past sales history?
- Explain your needs and expectations to the real estate professional you choose to work with
3) Find the Right Property
- Determine what is important to you, such as particular schools, neighborhood amenities, walkability, does the property have a garage, etc.
- Make sure you include utilities, insurance and taxes (and potentially HOA fees) when calculating the monthly mortgage payment
4) Finance the Property
- Contact your mortgage broker or lender
- Make sure you understand the financing terms—ask the lender for clarification, if needed
- Be truthful on your mortgage application. Lenders are diligent in verifying information on mortgage applications.
- Hold off on big purchases. Lenders double-check buyers’ credit right before the closing to be sure their financial condition hasn’t weakened. If you’ve opened new credit cards, significantly increased the balance on existing cards, taken out new loans, or depleted your savings, your credit score may have dropped or it may affect your income ratios.
- Although it’s tempting to purchase new furniture and other items for your new home, or even a new car, wait until after the closing.
- Keep your job. The lender may refuse to fund your loan if you quit or change jobs before you close the purchase. The time to take either step is after a home closing, not before.
5) Make an Offer
- Ensure the property is inspected by a licensed home inspector
- Read all contracts before signing—make sure you understand all of the terms, ask questions
- Place a competitive bid and be prepared to make a counter-offer
- Only one offer will result in a sale, so be prepared to move on if your offer is not accepted
- Meet contingencies. If your contract requires you to do something before the sale, do it. If you’re required to secure financing, promptly provide all the information the lender requires. If you must deposit funds into escrow, don’t stall. If you have 10 days to get a home inspection, call the inspector immediately.
- Consider deadlines immovable. Get your funds together a week or so before the closing, so you don’t have to ask for a delay. Plan to wire your closing funds a day or two prior to closing. In Santa Barbara Buyer and Lender funds are delivered to escrow on the day prior to closing, with possible exceptions being Fridays or the last day of the month.
- Treat deadlines as sacrosanct.
6) Closing and Life After the Big Purchase
- Protect your new asset by obtaining insurance such as homeowner’s, flood, disaster, and fire
- Maintain files—digital or print—for all warranties, insurance documents, contracts, etc.
- Keep original closing documents in a safe place, preferably outside the home (such as a safety deposit box)
- Set up utilities bills in your name
- Implement desired aesthetic changes such as painting, minor construction, and re-flooring
- Set a move date and hire movers or plan a move party with your friends
- Get to know your neighbors and explore your new neighborhood
- If you’re happy with the work of your real estate professional, be sure to recommend her/him to friends and family