Buying your first home is incredibly exciting, but it’s also challenging and time-consuming. Your budget will dictate which home you can buy, but the local economy, the housing market, and real estate trends will also strongly influence your decision. If you’re just starting your search for a dream home, you should know all the steps for buying a first home in California to be able to navigate your choices.
Evaluate your financial situation
One of the first things you’ll need to do is asking yourself a few questions:
- Do you have a stable income?
- Do you have enough savings to cover closing costs which are typically 2-5% of the home’s price?
- Can you cover a down payment of at least 20% for a conventional loan?
- Do you have a good credit score?
- Do you pay your current housing costs on time?
- Will you be able to pay for various homeownership costs, such as maintenance expenses and repairs?
If the answer to all these questions is “yes”, it seems that you’re financially ready to buy your first home.
Choose the right neighborhood
The location of your future home is a crucial thing to consider. Decide which area is best for you by looking at:
- Average home values
- Trends in property appreciation
- Local lifestyle
When you consider all of these, you’ll be able to determine whether you can afford to live in one area. You’ll also know if buying in that area is a good investment that is likely to pay off in the future. Keep in mind that the neighborhood you choose can impact everything in your everyday life. So, think about a daily commute and transportation options, walkability, crime rates, local amenities, etc.
When buying a first home in California, choose the neighborhood that meets all your needs and preferences.
Find an experienced local real estate agent
When it comes to buying a first home in California, the real estate agent you choose will be your main ally. They will work in your best interest, find and show you houses that match your criteria. They will also make recommendations for other services if needed. And, most of all, they will make sure you get an excellent deal for a house you like. It would be best to have a local agent from California, experienced in your chosen neighborhood and price range. Their knowledge will help you make a smart decision.
Get pre-approved for a mortgage
Most of California’s housing markets are competitive, meaning that a single home will receive multiple offers. That’s especially noticeable in San Francisco, where many young professionals live, but it’s also true for other coastal cities. Buyers must be prepared to compete with cash offers, multiple bids, high down payments, and earnest money deposits. That’s why having a pre-approval for a mortgage will give you an edge. To obtain it, your credit, income, and assets must meet the lender’s guidelines. Pre-approval will show the seller that you have started the loan approval process and that you’re serious about financing your first California home.
Start house hunting
Searching for homes and viewing them is fun, but you’ll also have to make big decisions along the way and determine which one is right for you. When looking at different homes, you’ll have to consider various factors. To make a house-hunting process more manageable, make a list of:
- Priorities with must-have features
- Nice-to have-features
- Dealbreakers in a home.
Share those lists with your real estate agent, and that will help narrow down your choices. So, you’ll save precious time and look only at homes that match your price range as well as other given criteria.
Depending on many factors, but mainly on the housing market and how lucky you are, you may buy a house after making many offers on multiple properties, or you can buy the first home you make an offer on. If you’re interested in a home in a competitive market and you’re not in a hurry to buy, be ready for multiple attempts and rejections. But if you’re on a time crunch for any reason, you may want to bid more aggressively and agree on specific terms to get your offer accepted faster, despite competition.
Home inspection and appraisal
When a seller accepts your offer, you’ll have two due diligence steps to make buying a first home in California successful:
- Home inspection – A licensed inspector should thoroughly check the property’s condition, including the foundation, roof, electrical system, plumbing, HVAC system, etc.
- An appraisal – When you’re taking out a mortgage, a lender requires an appraisal. This step is about determining the home’s real value and making sure that it’s worth the amount of money you’ll be given.
These two steps will give you peace of mind and ensure the home you’re buying is exactly what you hope to get. If something unexpected pops during each of these, you should discuss it with your agent and go back to negotiations with the seller.
Provided that the home inspection didn’t reveal any significant problems, you are finally ready to close. You’ll have to sign a lot of paperwork in a short time and pay for the usual closing costs. If you have any remaining questions about the closing documents, make sure to discuss them with your agent or a lawyer before you sign them.
Caption: During closing, you’ll have to sign many documents, so make sure you understand them all.
Move into your home
When the home is officially yours, it’s time to move there and start your new life chapter as a homeowner. So, the next step you need to take is to hire a reliable cross-country moving company – the one that will meet all your needs and make moving into your California home one smooth and stress-free experience. After you settle in and adjust to your new environment, make sure to find some time to write a review for the movers you chose. Share your impression of the company and help the others who will follow in your footsteps. That’s officially the last step, and all that’s left is to enjoy your new home, making it cozy and inviting.
If you’re well informed and prepared, buying a first home in California won’t be overwhelming. When you’re familiar with all these steps, you have the right agent by your side, and you have a little bit of luck, you’ll be able to find your dream home in no time!
Author: Matthew Schwimmer