HOW TO BUY A HOME
You buy a home for many reasons: relocating, downsizing, investing, a growing family, retirement, or jumping into the real estate market as a first-time buyer. Whatever your reason, it is essential to bring in the right Realtor to help you achieve your goal.
Read more below for tips on home buying, what guidelines to follow while home-buying, or even an overview of home-buying.
We also have some current videos on today’s loan lending market links - feel free to peruse them. You can call us at 415.735.8037, email me at mark@markdmchale.com, or send us a message at contact us if you have any questions.
Finding Your Dream Home
From professional and personal experience, I know that buying or investing in property is often one of the most significant financial decisions you will make. Whether you're a first-timer or a seasoned investor, the process involves many decisions, not just one, and it's a great idea to have a Realtor you trust and who knows you to serve as a sounding board for your decisions along the way.
Why You Should Buy Property
There are many reasons to buy property, and not everyone has the same goals. Are you tired of paying rent and having nothing to show for it? Have you outgrown your current home? Do you need to downsize/upsize? Are you taking a new job in a new city or town? Are you retiring? Do you want a larger backyard? Maybe a shorter commute? Curious about rental property investments? Need a home near a good school? (Check out Local School Ratings)
Whatever the reason(s), having a clear sense of what's important to you will help you choose and buy the right properties.
Preparing to Buy Property
Before you start shopping for your property, preparing yourself for the journey is a great idea.
Know Your Numbers:
Take an assessment of your outstanding debts, assets, and annual income. And setting up a household budget if you haven't done so already is a surefire way to assess your financial situation.
Meet early with a finance professional (like a CPA or financial planner) to discuss your financial goals, where home buying fits in, and have a long-term game plan.
FICO scores matter: If a purchase involves financing, a good credit score and a healthy savings account are key to loan qualification and will also determine the type of loan terms offered.
Employment history is important: you must have at least two years of work history in your current field for most lenders to consider you for a loan. And you'll want to be sure there are no hiccups in your employment status while you're buying.
Reduce outstanding debt: as much as possible, and save, save, save. 20% down payments are standard.
Decide What You Want:
Put together a list of wants AND don't want with your new property in mind, be sure to compare lists and prioritize them if you're buying with someone else.
In what are the neighborhoods you'll consider living? Take a weekend day and drive around the city- you'll be surprised by what you find and like!
Features: bedrooms, baths, a yard, balcony, storage, square footage, parking, washer, and dryer, one floor, close to shops. What features are most important, and then decide if each is a "must-have" or a "like-to-have"?
What's your price point, and how much do you want to pay monthly? (Getting ahead of myself, but this is where you talk to your Realtor about what to ask a lender).
Do a little research on your own first, but know that I am here for you. It's my job to know the market. So, let's have a simple conversation to get you moving in the right direction.
I can help you understand the process and execute your step-by-step plan so that it's exciting and fun.
Choosing the Right San Francisco Real Estate Agent
Because buying real estate requires understanding complex property issues, invisible market dynamics, local customs, legal contracts, and many other complex topics, it helps to have a professional on board. As an experienced Realtor, I provide my clients with insight, wisdom, and focus on making the process easier, less risky, and less confusing. Here is a list of considerations when moving forward:
Professional Representation: You'll surely want a Realtor who knows the nuances of the local market, the local players (and their styles), and how to play the game not only to win but without throwing money away needlessly while reducing potential risks and safeguarding your interests every step of the way.
Education on the Buying Process, Local Customs, and Current Market Dynamics: Knowing the process, what forms to use, how to protect your interests, what the current market dynamics are doing, and what your competition is up to can help us identify the strategy and tactics to make a firm offer and get the property you want.
Tailored Searches and Touring: My job is to preview homes that fit your needs and select the best among them. Daily check-ins, company meetings, and frequent tours give me inventory to consider on your behalf. You're invited in on the search too! In no time, we'll drill down on your wants/needs and find the right place for you.
Choosing the Right Lender
If you're financing your property purchase, having the right lender on board is critical- 90% of the problems that occur and potentially threaten a transaction have to do with the loan.
Is an Online or Live Lender Better? While online lenders are getting better and usually promise to make the process smoother and more manageable, let's be sure they're suitable for the job. Taking the risk with an unknown player who may not be able to close on time or deliver your promised terms can be fatal to the transaction, which can end in costly ramifications for you.
What's Important to You? We all know finding the best interest rate, lowest loan costs, and manageable monthly payments are important, but be sure to check out the loan officer's experience, their on-time record of accomplishment, performance times, and their level of investment in your success. The lender is the front-line soldier for you getting the loan, and we need to know they'll fight tooth and nail for you.
You want a lender who is an asset to you and your offer, not a question mark.
Look at it from the seller's perspective: how does your lender stack up with the other offers, and what does a seller want if they chose your offer?
Is your lender a known entity?
Is your lender familiar with the local market?
Are your lender's performance benchmarks competitive?
Does your lender have a good track record of successful closings?
What will your lender tell them about your financial capacity?
Is your lender invested in the success of this transaction?
Different buyers and properties may need different loan products: not every buyer needs a 30-year fixed loan, and not all properties require one. Mortgage brokers, Investment brokers, Direct Lenders, 30-year, fixed rates, adjustable rates- it's great to have options, but which options are best for your situation? That's right, talk to me first, and I'll get you pointed in the right direction.
Submit a Loan Application and Get Pre-Approved (It's a Must Have)
The lender you choose will ask for your important financial documents. Let's get them in order as the first step. This application file includes recent copies of your:
financial statements
investments
bank accounts
credit cards
auto loans
last two years of tax returns
leases or rental, or other property investments
stocks, bonds, 401k statements
With Pre-Approval Comes a Price Range: once you have pre-approval from the lender, you'll know the price point to shop from and your monthly costs. This range will help focus our search, so we're looking at the right places to purchase.
Underwriting and Loan Approval: only after your offer's acceptance on your dream home (during escrow) is your application fully underwritten by the bank. Approval (or not) comes only days before you close. There are certain do's and don'ts you should adhere to during this process- no big purchases, don't pay off cards or move money, and don't quit your job! We'll talk about this well in advance.
Start Home Shopping
One of our first objectives is to establish your wants and needs in a new property. We'll have fun discussing the features of your perfect property, the neighborhoods you'd like to consider, and the price point that's right for your budget. Because I know the San Francisco real estate market, touring several times a week, I can narrow the list of potential homes for you, and we can start home shopping right off.
Targeting the Right Property: At this point, we're in touch daily and weekly, and I will provide a short list of candidates for your consideration. In my experience, we should go on tour several times together before you self-tour. Touring open houses together helps me focus on your tastes and the emotional and practical responses to particular property types, and I can ask more in-depth questions. From this point, it's a tag team effort to search for the right place for you.
When It's Time to Buy: Soon, we'll find a place that catches your interest, and that's when we drill down. I'll go to work getting the available disclosures, inquiring about the seller's needs/wants, and comparing similar property values in the neighborhood, and we'll begin discussing the strategy we'll employ in putting together your offer.
Making The Winning Offer
Targeted Property Assessment, Valuation, and Strategy Consultation: When we zero in on a property you like, I'll go to work gathering data and details for you: starting with a walk-through tour, sharing what I see and what high-level challenges there might be. I'll get the disclosures, identify comps to assess value, investigate the level of competition, and brief you on the listing agent's style so we can formulate a winning offer without wasting time or throwing money away unnecessarily.
Professional Offer Assembly and Presentation: When your offer is submitted, I can assure you that my professionalism, cooperation, and good reputation will bring additional value to the table. I employ the highest standards of presentation, proactive communication, and refined negotiating skills, and I have spent years buildings strong relationships with other agents so that you stand a better chance of having your offer accepted.
Expert Contract Negotiations and Execution of Terms: Understanding the seller's needs is critical as we craft the terms of your offer - it can make the difference to having your offer rejected or accepted. Often, it's not just about money but intangible factors such as personality, intention, and empathy. Whatever it takes, you'll enjoy the best vantage point to prevail.
Referrals to Quality Services: As we get closer to the offering, keep in mind that I have a deep bench and can offer connections to dependable service providers who do their job well, on budget, and at a fair price. Call me any time you need a service referral.
Escrow, Inspections, Appraisals, and Loan Approval
Congratulations! If we've reached this step of the home-buying process, the seller has accepted your offer. Now, we can focus on the following steps: escrow, inspections, appraisal, and loan approval.
Escrow: (Also known as being "in contract"), In the simplest terms, escrow is an account held by a neutral, trusted third party to carry out the agreed instructions of the contract. The seller usually chooses the escrow company in advance. The escrow officer works with both parties to perform as promised, and the escrow account holds the funds (like the initial deposit, down payments, lender funds, etc.). When all the funds are in place and all the instructions are complete, the title officer will transfer the ownership by recording the buyer's name(s) on the title and then "fund and close escrow."
Inspections: The buyers are entitled to any and all inspections to understand what they are buying. Inspections in a more balanced real estate market generally occur after offer acceptance. The results of these inspections can lead to a request for the seller to do repair work or a request for credit back to the buyers. In a seller's market, the seller generally completes the customary inspections before listing the property for sale. Buyers are asked to review the inspection reports with the hope that an offer is written "as-is" with no additional inspections requested.
Appraisal: If financing is involved, the lender will want assurance that the property value is more than the loan considered. So, they will order an appraiser to visit the property and determine its fair market value. The appraisal report is used in conjunction with the buyer's total credit picture to approve the loan.
Loan Approval: Once the lender receives and approves the appraisal report and the buyers receive any final item requests, the lender then provides loan approval, and the buyers can remove the appraisal and loan approval contingencies.
Close of Escrow and Moving In
We're in the home stretch. As we approach the close of escrow, there are just a few more pieces to pull together before you take ownership of the property.
Walk-through Inspection: A walk-through is mostly a formality, but it's essential. The walk-through is a visit to the property to make sure everything is as it should be: no missing appliances, the landscaping is cared for, and everything is intact. This final inspection occurs a few days before closing.
Be Prepared: Sometimes delays can occur even in this last stage. Sometimes it's a snag with the loan or last-minute paperwork. But, not to worry, you'll be the first to know about it (from me), and I will get to work putting a solution in place. In more than 25 years of experience, I've seen some pretty quirky issues come up, and by now, I usually know how to handle them efficiently.
The Signing Appointment: The signing appointment is where it all comes together, where you arrive at the escrow/title office to sign all the documents. We will ensure the financial numbers add up, the lender issues their mortgage documents, and the preparation of the title report is ready. You won't see the sellers, but they will have a signing appointment of their own, too. More times than not, this is the easiest part of the home-buying process. I will be with you to answer any questions you might have as we review each form. Before arriving, you'll be asked to bring in or wire your remaining down payment and a valid ID.
The Closing: The last and final step, when all the paperwork has been received and verified by the escrow officer and the lender, the loan funds are deposited into escrow. Soon, the tax assessor records the change in ownership. This change of ownership can be the same day as when you sign, but it typically happens the next day or two. All that's left is me getting you the keys, and you are free to take possession. You'll be astounded at your good fortune and overwhelmed that you really did it!