Top 5 Tips For Buying a Home
1. Want to avoid surprises? Before signing on the dotted line, visit your prospective home at different times of the day to see if the property and neighborhood continue to match your first impression. As part of your due diligence, make at least three trips - morning, noon and night - to assess commute times, lighting, the general atmosphere of the community or other characteristics that are important to you.
2. While adjustable-rate and interest-only mortgages may save you money initially, select these mortgage products only if you can comfortably make your mortgage payments should interest rates increase after the initial fixed or interest-only mortgage period expires. From ARMs to balloons, understanding common mortgage lingo will help you have a knowledgeable conversation with your lender about the mortgage options available to you.
3. No house is perfect. That is why under the California Residential Purchase Agreement, there is a fixed time period designated for you to carefully examine the property and assess any areas of concern about your future home without the fear of losing your deposit money. Most home buyers hire a professional inspector to conduct a visual, noninvasive examination of the home, including the home's structure, construction and mechanical systems, and appliances, which may be transferred with the property.
4. Before you start looking for your piece of California, determine how much you can afford by calculating 33 percent of your monthly gross income. This is the maximum amount most lenders suggest homeowners devote to PITI - principal, interest, taxes and insurance - better known as the four components of your monthly mortgage payment.
5. Carefully prepare for the upfront fees you will be expected to pay once you enter into a transaction. Among these fees are your escrow deposit and inspection fees. Generally, your escrow deposit should be substantial enough to demonstrate your 'good faith' to the sellers - usually 1 to 5 percent of the sales price - and will be credited toward your down payment if the sale moves forward. In California, standard inspection fees range from $300 to $400.