California First Time Home Buyer Things To Know

I see home buyers go through a cycle of emotions when buying a home in and securing a California mortgage, but here’s some things a California first time homebuyer should know.

It’s initially exciting to buy a home.

Than it’s nervous time when qualifying for a California home loan.

Than anxiety can happen due to the lenders throwing conditions your way making it difficult to get a loan.

And than anger can top off the entire process because you seem to have no control and no one is returning your phone calls.

A home buyer needs to understand that this current real estate market is unlike any other ever experienced especially in this new frontier of lending.

Here’s some things you need to know before you start the home buying process:

  1. Expect the unexpected: Especially during the loan process.
  2. You need to get prequalified for a California home loan before looking at houses. Part of the Realtor’s job is to get you excited about homeownership.  You need to know how much you can afford first before you look for a home. You don’t want to get your heart set on a house, only to discover that you can’t qualify for the loan amount required to buy that home.  Save yourself the heartache and talk to a lender first.  Need to get prequalifiied?  Click here to start the process.
  3. Come up with what a “comfortable” mortgage payment that YOU want to make each month before contacting a lender. You wan to own the house not let it own you!  Convey this comfortable loan payment to your lender right way that way the lender can say “o.k. that payment you gave me affords a loan amount of…..X.
  4. Expect payment shock.  This is an actual lending term.  A monthly payment for a $250k loan amount may be $1342.00/month by your calculations at a 5% interest rate.  But than there’s $50.00/month for homeowners insurance, than $275.00/month for a property taxes, than $140/month for PMI insurance and suddenly your total monthly payment jumps to $1807.00/month.  The numbers above are based on 10% down payment on a purchase price of $275,000.
  5. You now have to pay utilities.  Water, electricity/gas, trash and even a gardener are all now your responsibility.  If you want a pool, check into how much more power and supplies it’s going to cost on a monthly basis to run it.  You may be surprised.
  6. If you are a married couple buying a home and you are California first time home buyers, think what’s going to happen if you want to start a family? Child care expenses are enormous.  Also, can you make the mortgage payment for an extended period of time on one income (assuming you are a dual family income)?
  7. If you think your first home is a starter home, think again.  Due to unforeseen future circumstances you may end up staying in the home longer than anticipated.  Keep this in mind!
  8. If you plan to make a large down payment on your home purchase, be prepared to not get it back if you sell the home within 5-10 years. We are in a down market and will be for quite a while.  Realtor fees and taxes will eat up equity so just realize you probably will not get your down payment money back if you sell within that period.
  9. If you’re planning to do home improvements plan on using your own cash to do them. Home equity loans require you have at least 25% equity these days.  So this will play an important factor on how much of a down payment you make.  Should you make less of a down payment so that you have more funds for home improvement?  If you want to buy a fixer upper, there’s a loan you can get where you can buy the home and get funds to fix it up all in one loan.  For more information click here.

10.  Make sure that your Realtor and home loan person work past 6 p.m. and are available on weekends.  If you have a question that’s driving you nuts, don’t let it ruin your weekend.  Make sure you can get answers on YOUR terms.

There are many more issues that home buyers face than what I’ve listed here.  Once I think of 10 more, I’ll write again.  Just understand that our California real estate market is in turmoil and is going thru painful changes that directly affect you, the home buyer.  Expect the unexpected and having nerves of steel will be needed.  But once you get the keys to your home, it’s all worth it.

If you have any questions in regards to the content of this article,  California first time homebuyer should know,  please click here and let me know!

Best

Kevin Walton

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