Buying a home

Deciding to buy a home
There are many factors to consider when contemplating home ownership. While there are benefits and drawbacks to owning a home, you have to decide what is best for you. Homeowners experience the freedom of having a place of their own and the benefit of an investment where the equity potentially increases each year. Historically, homes have appreciated in value, making them worth more than when they were purchased. Additionally, there are significant tax benefits to owning a home and paying mortgage interest.

Home ownership also means you are responsible for all maintenance and repairs. In addition to paying the mortgage every month, there are other expenses to keep in mind: homeowner’s insurance, property taxes, condominium fees and utilities. In the event you wish to move, selling a home is more difficult and more time consuming than giving notice to a landlord.

How Much Can You Afford?
Once you have decided to become a homeowner, you should review your finances and determine how much you can afford per month. Begin by analyzing your current monthly expenses. It may be necessary to cut back on some areas of spending in order to afford a mortgage payment and the other costs of owning a home.

Check Your Credit Report
When applying for a mortgage, a lender will look at how much you can afford to pay and your credit history to determine if you qualify for a loan. Consumers should check their credit report for discrepancies before going to a lender. Obtaining a copy of your credit report is simple and consumers living in Orange County can obtain one free copy of their credit report per year. You can call or e-mail one of the three major credit reporting bureaus for a copy of your credit report.

Mortgage Pre-Qualification
Once you have determined how much you can spend each month on your new home, you can determine the maximum sales price you can afford. The maximum sales price you can afford will vary depending on your income and the size of your down payment. A mortgage pre-qualification will give you an estimate of the amount of money you can borrow to purchase a home along with an estimate of your monthly payment.

Mortgage Pre-Approval
A mortgage pre-approval is not the same as pre-qualification. A pre-approval means you have completed the application process and have a written commitment from the lender to give you a mortgage loan for a certain amount. Pre-approval gives you an advantage when dealing with a seller since you already have financing in place. Typically, the home remains under contract while the buyer obtains financing. The seller will be able to complete the transaction sooner to a pre-approved buyer.

The disadvantages of pre-approval are that you may have to pay an application fee and complete the necessary forms verifying your employment, income and credit. If you later decide not to use the lender who issued the pre-approval, you will forfeit any application fee and have to go through the process again.

What Kind of Home is Right for You?
Everyone’s dream home contains different things. While your next door neighbor may want a backyard pool in his dream home, you may want a large yard for children to play in. Since there are many different ideas of what makes a dream home, you need to decide what features you absolutely must have in your new home. Orange County homes come in many different styles and sizes. There are single-family dwellings, duplexes, town homes and apartment-like condominiums. Within each home there are many differences, such as the number of bedrooms and bathrooms.

Create a list of things you must have for your new home. Then make a wish list of those amenities you would like to have, but can live without.

  • What kind of home do you want?
  • How many bedrooms, bathrooms do you need?
  • Where do you want to live?
  • Are schools and shopping conveniently located?
  • What kind of transportation is available?

Find a Real Estate Agent
In the past, a real estate agent was only hired to assist a homeowner in selling their home. Today, it is mandatory for home buyers to hire a real estate agent to assist them in finding a home. A seller’s agent is obligated to the person selling their home and will look out for their interests. A buyer’s agent is responsible to you and is obligated to follow your instructions. All of our buyer representation services are 100% free to all buyers. Make sure the agent you select is licensed Realtor in the state of California and familiar with some of the areas you are considering.

If you would like help finding your next home in Orange County feel free to contact our home buying specialist for assistance in buying your next home.

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