Ultimate first time home buyer guide

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Why are you buying?

As you take this first step, it’s important to keep in mind exactly why you want to buy a house; what is your motivation? Your motivation will help guide you throughout this home search. There are many reasons to buy a home in 2019.

  • Ask yourself, why are you starting the process to buy a home?
  • Are you starting a new family, starting a new job or just want to build some equity in a property!?
  • Or, are you buying a home because your great aunt said she bought a home 50 years ago and you now need to?

Whatever the reason is, make sure you understand it because buying a home is a big financial step, but one that can be extremely rewarding on many levels.

Connect with an agent sooner
rather than later

Buying your first home will likely be one of the biggest purchases you will make. When making such a financial commitment, it can be a big mistake to wait until you have found your “dream home” before you select an Agent to assist you. You know you will need an Agent to handle the transaction correctly, so does it make sense to trust an Agent to handle the contract but to bring that Agent in only towards the end of your journey? No, that doesn’t make sense. Wouldn’t you prefer to have an Agent with you every step of the way?. It’s crucial for you to find an Agent at the start of your home search. Spending as much time as possible with your Agent allows the Agent to learn about your wants and needs, and to get to know you as a person. If your Agent isn’t with you every step of the way guiding, working, consulting, searching, learning, teaching and coaching you through the start of the process, you will likely waste lots of your valuable time and may well miss out on many opportunities. If you work with an Agent as you start this process, the Agent can guide you and put you on the path to success. Choosing an Agent at the beginning of your search will remove much of the stress encountered during the home buying process. In addition, you will not have to flounder while having to figure the beginning stages out on your own.

Get prequalified & connect with a lender

Getting a prequalification letter from a lender may well be the most important steps in the entire first time home buyer process. At the very start of this home buying journey, buyers should consult with a lender to learn how much money a lender will loan them. Going online to look at homes or trying to identify your dream home without knowing the size of a loan you qualify for can lead to disappointment and frustration. The last thing you would want to happen is to find your dream home, make an offer and then not be able to qualify for the loan.

In order to prevent this, there is an order of operations, just like in math, that home buyer must follow:

Pre Qualified + Market Value Offer = Dream Home!

Decide if pre-qualification amount fits your wants and needs

A huge benefit to getting a pre-qualification letter is that it gives a buyer a guide to what price point the buyer can afford. With this price point guide, you can now start to tailor your search to areas with homes within your budget. As you complete this search, you may find that the area you want to be in and the price point you can afford might not match up! In this case, some buyers will go back to the drawing board and will either wait until they can afford a slightly higher price point or adjust their expectations. In other cases, buyers realize they can actually afford slightly more of a home than expected

Research financing options/down payment
programs with your lender

One of the biggest hurdles for most first time home buyers is trying to come up with funds for a down payment. Luckily, multiple financing options exist and there are programs to help first time home buyers get into their dream home. Here are a few options:

  • CalFHA – Ability to take out a loan with only 3.5 % of the purchase price as a down payment
  • My Home Assistance Program – This program allows for deferred payment of up to 3.5 percent of the appraisal amount or purchase price (whichever is lower) to help with the down payment.
  • Local City Assistance Programs –

Orange County, CA assistance program

The 3% simple interest, deferred payment loan has a 30-year term and a maximum loan amount of $40,000. Homebuyers must occupy the property as their primary residence. There is a 1% minimum down payment requirement for this program and the total sales prices shall not exceed 85% of the Orange County median sales price for all homes, which as of April 2016 is $548,250 (85% of $645,000). All applicants are required to attend a homebuyer education workshop.

Before you choose one of these programs, I recommend going over each one with you lender regarding its pros and cons.

After the offer is accepted, what happens next?

  • Offer accepted

  • Open escrow & time lines start

  • Receive Escrow Instructions

  • Make your initial deposit

  • Schedule home Inspection

  • Your lender will schedule the appraisal

  • Decide what you want fixed or repaired

  • Come to agreement with seller regarding repairs

  • Lender will receive appraisal back

  • Lender will give the loan approval

  • Agree to remove all contingencies

  • Final walk through to verify repairs have been made

  • Sign closing disclosures and your sale will be recorded