We have some friends, Sally and John, here in San Diego who called early this year to tell us they are looking to buy a house. After years of saving, they had enough money for the down payment and other extras. They went from just looking at dozens of houses online to submitting an offer. After they bought their house and we invited them to dinner to celebrate. They shared with us their 6 Tips for first time home buyers.
6 Tips for first-time home buyers
Before house hunting, Sally and John got pre-qualified. They talked to different lenders and found which lenders offer the best rates and terms, and also who had manageable fees and costs. They found lender fees can vary quite a bit from one to the next. That’s because there are three main lenders: big banks and credit unions, mortgage bankers and mortgage brokers. It pays to shop around.
Pre-qualification gave them great information about how much house they could afford and allowed them to move quickly when they found the right house.
Sally and John then sought a Full Time Realtor. They asked their friends for the name of a great real estate broker. Their friends were eager to share their experiences. They found a wonderful lady who became their friend. A realtor they could trust. Sally and John were with her for many hours, and it was a big help that they all got along. “Yes,” they said, “we had unprecedented internet access to sellers’ information, but a realtor has years of experience that helped them with everything from the area, the appraising of a dwelling, the paperwork, the comparisons, and negotiation on price.
Each area they looked at, their realtor had information about the schools, the reputation, can the kids walk to school? Is there an alternative school available, like a charter school or parochial school if the public school doesn’t work out?
More of the 6 Tips for First Time Home Buyers
The exciting moment came for Sally and John when they made an offer. That’s when their realtor told them to hire a general home inspector. She said that hiring a home inspector is recommended right after the offer-to-purchase contract is signed and before executing the final purchase and sales agreement. The findings of the home inspector could save them lots of money.
They made sure that the offering was contingent on the findings of the home inspector. The inspector examined the exposed portions of the home, such as the roof, attic, walls, ceilings, floors, windows, doors, foundation, heating/cooling systems, interior plumbing, and electrical systems. In Sally and John’s case, they found the sewer line from the house wasn’t connected and it would cost $15,000 to connect. It was news to the seller, and they agreed to share the cost.
Beware of sleeper costs – Sally and John cautioned there are differences between the monthly mortgage payments and the total monthly payments. There are property taxes and insurance. Then there’s the unexpected. It seemed little things needed fixing costing them units. A unit they figured was $500. When they first moved into their house, the front, cement porch collapsed costing them three units. They changed the hearth costing them two units. It got to be a running joke.
Then there was Title Insurance
Sally and John came across another fee: Title Insurance. Their realtor explained the seller produces and signs a warranty deed at the real-estate closing. It includes a full legal description of the property and pledges that the seller owns clear title to the property changing hands. The warranty deed also guarantees that the property is free of all liens and encumbrances. The lender required them to have Title Insurance to protect the mortgage. Their realtor explained that they needed homeowner Title Insurance. Title Insurance compensates the property owner further strengthening the warranty deed in case of any third-party claim on the property.
For Sally and John buying a house was cheaper than renting. Renting was taking 50% of their monthly income while owning will take about 30%. They will need the extra income because guess what? Sally and John are expecting their first child.
- Get pre-qualified
- Seek Full Time Realtor
- Look for good schools
- Hire a general home inspector
- Beware of sleeper costs
- Get Title Insurance
“Just Call Judy ”
“Don’t Make a Move Without Me, Just Call Judy”