Buying a new home is nerve-wracking, particularly if you are doing it for the first time. These tips can assist you to navigate the method, save cash and avoid common mistakes while shopping for new homes in Murrieta, Southern California, or anywhere else. To make things simpler for you, we organized our tips into four categories: Mortgage payment tips, Mortgage application tips, House searching tips, and First-time buyer mistakes to avoid.
Mortgage Payment Tips
1. Begin saving for your payment early
It is common to put 20% down on a new home, however many lenders are allowing first-time buyers to put down as little as 3%. But if your down payment is less than 20% it means that you may acquire higher costs along the way as well as having to pay for private mortgage insurance. This means that your initially small down payment, can still result in hefty fees. Bottom line is, in order to reduce your overall costs put down as much as you can on your down payment so you don’t have to experience too many other costs.
2. Explore your payment and mortgage choices
There is a wide variety of mortgage options, each with their own set of pros and cons. If you’re struggling to come up with a down payment on your own, we suggest that you take a look at these loans for help:
Conventional mortgages change to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, and need as very little as a 3% down payment.
FHA loans are loans that are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
VA loans are loans that often do not need any down payment and they are guaranteed by the Department of Veterans Affairs.
Putting a higher amount of money down initially will mean that your monthly mortgage payments will be lower.
If you are trying to make sure that your mortgage payment is as small as possible, then you will want to go for a 30-year fixed mortgage. However, if you are able to afford more per month then 20-year or 15-year fixed loans will get you lower interest rates.
3. Searching for help programs on a state or local level
In addition to the above federal programs, there are many help programs that states will provide for first-time buyers. These programs usually have perks like payment help, closing price help, tax credits and discounted interest rates. Even your county or municipality may have first-timer programs.
Mortgage Application Tips
4. Confirm how much you’ll be able to afford
Before you begin searching for your new dream home in Murrieta CA, you need to be able to grasp what sort of home is within your price range.
5. Check your credit and pause any new activity
When applying for a real estate loan, your credit is going to be one among the key factors in whether or not you’re approved. Your credit is also going to be one of the factors that determines your interest rate as well as the terms of your loan.
So check your credit before you start searching for new homes in Murrieta CA. Dispute any errors that might be dragging down your credit score and check for any opportunities that will enhance your credit, like starting to pay off any outstanding debts.
In order to keep your score from changing when you apply for a mortgage, avoid opening any new credit cards or any other new credit accounts until your loan has come to a close.
6. Compare mortgage rates
A lot of new home buyers only get rate quotes from one lender, however this usually leaves cash on the table. The Consumer Financial Protection Bureau suggests looking at mortgage rates from a minimum of 3 lenders as it can save you quite a bit of money on the first 5 years of your loan. So get a minimum of 3 quotes and compare rates and charges.
As you’re examining quotes, be sure to ask if any of the lenders would let you to buy discount points, which implies that you will pay interest up front in order to secure a lower rate on your loan. To determine whether or not buying points makes sense, you need to look at how long you are going to stay in your new home as well as whether or not you have money on-hand to put towards the points.
7. Get a preapproval letter
It’s possible to get pre-qualified for a mortgage, which will basically just give you a rough estimate of just how much a lender will possibly be willing to lend you based on how much you make and how much money you already owe. However, as you get closer to purchasing your new home, it is suggested that you get a preapproval. A preapproval is where the lender will examine your finances thoroughly and then will confirm in writing just how much they are willing to lend you as well as the terms of the loan. Having this letter in hand makes you look much more serious to a seller of new homes in Murrieta and may give you an upper hand over others who haven’t taken this step.
House Searching Tips
8. Hire the perfect buyer’s agent
You’ll be operating closely with your realty agent, so it is very important that you hire someone you get along really well with. The proper buyer’s agent ought to be extremely skilled, driven and should know a lot about the area you are looking to purchase a new home.
9. Decide the proper sort of house and neighborhood
You may assume you’ll purchase a single-family home, which may be ideal if you would like a giant yard or tons of space. however if you’re willing to sacrifice area for fewer maintenance and further amenities, and you don’t mind paying a owners association fee, a condo or townhouse may be a much better match.
But even if the house is correct, the neighborhood may be all wrong. So make sure that you:
• Research schools that are nearby, even if you don’t have any children yet, since they have an effect on home value.
• Look at the city’s safety and crime statistics.
• Find the closest hospital, pharmacy, grocery and alternative amenities you’ll use.
• Drive through the neighborhood on numerous days and at totally different times to check out traffic, noise and activity levels.
10. Follow your budget
Shop for homes that cost less than your approved amount. By shopping below your budget ceiling, you are able to account for other expenses you may encounter such as broken amenities that may happen right after purchasing. By keeping a firm budget while shopping for a new home, this is also going to help you when it comes time to make an offer.
No matter what, do not let your emotions get the best of you when shopping for new homes in Murrieta. Real estate is competitive, so chances are that you will be making bids on homes with multiple offers. Don’t be tempted to make an offer that is over your budget even if it is your perfect home. Shopping below your preapproved amount allows you to have some room for bidding. But you should stick to your budget so you can avoid getting stuck with a mortgage payment that you are not able to afford.
11. Open houses are your best friend
When you are attending open houses, be sure that you are aware of many different things. Take note of the overall condition of the home, any smells or stains you can see, and also be sure you know which items need to be repaired. Make sure you ask questions. You will want to know what year the home was built, when things were replaced last and also how new things like air conditioning and the heating system are.
If you are uncomfortable asking these questions around other potential buyers who may be at the open house with you, do not be afraid to request to schedule another private visit with the real estate agent so you are able to get a closer look and ask all the questions you want to know the answers to.
First-time Buyer Mistakes to Avoid
With so much on your plate, it is no surprise that some first-timers make mistakes that they end up regretting later. Here are a couple of the most common mistakes, alongside tips to help you not to make the same mistakes.
12. Not budgeting for closing prices
In addition to saving for a payment, you will need to take into account the money needed to close your mortgage and these fees can be significant. Closing prices will typically cost you anywhere from 2% to 5% of your original loan amount. You will be able to look around and compare costs for certain expenses like homeowners insurance, title searches, and home inspections. Calculate your expected closing prices to assist you in setting your budget.
13. Not saving enough for expenses after move-in
Once you’ve got enough saved for your payment and have budgeted for closing prices, you should put aside a buffer to procure what is going to go within the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any enhancements you might want to make to your new home once you have moved in.
14. Shopping for a home for today rather than tomorrow
It is easy to look at homes that meet what you currently need. However, if you are planning on starting or expanding your family, then you may want to look for a larger home that you can grow into rather than one you fit into right now. You need to think about your future needs and decide if the home you are shopping for will accommodate them.
15. Not negotiating
During the homebuying process, there is a lot that can be negotiated in order to save you money. Does anything need to be repaired that the seller can pay for? Are they willing to help pay for your closing costs? A lot of sellers will negotiate with you in order to get their house sold.
16. Not knowing the boundaries of a home examination
After your bid has been accepted, you will undergo a home examination to look at the home’s overall condition, however the results will not tell you everything.
• Make sure you know what is included in your inspection because not all of them will look for things like mold, radon or pests.
• Ensure that every part of the home is accessible for the inspector so that they can get onto places like the roof or into crawl spaces.
• Be at your home inspection and pay attention to every detail.
• Do not be scared to request that your inspector take a closer look at something. Make sure you ask questions about specific concerns you may have.
17. Not shopping for adequate owners insurance
Before you close on your new home, your lender is going to require that you buy homeowners insurance. Shop around and look at a variety of different insurance rates in order to find the best price. Make sure you know exactly what is covered in your policy as a less-expensive policy usually means that you have fewer things protected and will end up having more out-of-pocket expenses than desired.