Home : The Process of Buying a Home in California – Pacificwide Business Group – Medium
You have officially decided to purchase your own home and to become a homeowner. You are now officially one step closer to reaching another milestone in attaining the American dream! The homebuying process is a complex one; but we at Pacificwide are here to make this journey a lot easier and smoother for you. Read on to learn more about the step-by-step process of buying a home!
1. Establish Your Budget
Before you can do anything else, you need to sit down and do some math! It is extremely important to figure out exactly how much you can afford. You definitely do not want to find yourself caught in a financial crisis by the end of this process.
It is recommended that you find a house about two to three times your income. This number is ideal and ensures that you won’t be taking on more than you can handle. You should also make sure you have your down payment saved up.
In addition, don’t forget to add up the costs that you’ll need in order to make some repairs or to add decorations into your new house. These expenses should not come out of your emergency fund!
2. Get Pre-approved or Pre-qualified
If you do not have the sufficient funds to pay off your house on your own, you will need to look for a mortgage lender. The best mortgage lenders are knowledgeable, have great customer service skills, and are prompt at the time of closings.
A great option is to get pre-qualified. During this process, a mortgage lender will ask you questions about your financial situation-individual finances, debt, etc. By the end of this process, you will be provided with an estimate of how much you can truly afford.
An even better option is to apply for a pre-approval. During this process, a mortgage lender will run your credit check and assess your financial situation. Your lender will be able to verify your credit and finances and will then be able to determine how much they are willing to lend you. A pre-approval will definitely give you an edge over other potential buyers who do not have one, because it proves that you will have enough money in loans to pay for the home.
3. Start House-hunting
This is the fun part of your house-buying journey — actually searching for homes! This will be an exciting time as you get to explore different options and find the home that is truly meant to be yours.
There are lots of important factors to consider when you house-hunt, including location (How good is the neighborhood? How good are the schools in the area? Do you want to live in a suburban area like San Jose, or a city, like Los Angeles?) You should also consider what kind of home you want to live in (single-family detached homes, townhouses, condos, etc). In addition, it is important to establish what you want and what you need in a home (number of bedrooms and bathrooms, plumbing and electricity systems that work, etc.)
We recommend that you hire a real estate agent during this process-they are experienced, highly knowledgeable, and can make the entire process a lot smoother for you. They represent you, so they can help you to find houses that you’ll like, set up viewing appointments for you, and help you to negotiate. Best of all, they are free!
4. Shop for Home Insurance
Your mortgage lender will require that you own home insurance beforehand, so it is best to start looking as soon as possible.
Basic home insurance covers the following: theft, storm damage, fire, and liability (in the event that someone is physically harmed on your property and sues you). However, you can add to the package to cover things such as furniture, expensive jewelry, and more.
There are several home insurance providers, so make sure you do your research and find the one that works best for you.
5. Make an offer
After what has felt like a long and arduous process, you’ve finally found the perfect home — one that you’ve absolutely fallen in love with! Best of all, you can afford it. Now, it’s time to make an offer!
When coming up with this offer, you should consider the surrounding homes in the same neighborhood-how much did they sell for? Is your (soon-to-be) home priced fairly in comparison? If the numbers are similar between the different houses, you should make an offer using these numbers as a guideline. You should also consider how long your house has been on the market.
This process can be difficult-you want to make sure that your offer is reasonable and not too low, but you also do not want the number to be too high. A real estate agent is especially useful during this time. They are familiar with this process and can help you craft the perfect contract and the best-possible offer.
6. Home Inspection Day
Your offer has been accepted by the seller (great job!). In California (and a few other states), you are entitled to a home inspection that will take place before you sign the final paperwork. In other states, this home inspection may take place after the signing.
Your real estate agent can help you to arrange a home inspection, and they can also offer you advice on which specific inspections and tests to run.
This home inspection is meant to protect you — if there are certain defects, you may be entitled to a price reduction. If there are even more serious issues, you also have the option to back out of the purchase.
7. Sign the Paperwork (Closing Day)
You made it to closing day! This is a huge step — you’re almost at the end.
On closing day, you will have to sign a lot a paperwork. It will be a long and tiring day, but at least you know you’re one step closer to owning a brand new house to call your own!
Once the paperwork is signed and settled, you will receive your keys and will be able to move into your new home.
Congratulations, you are now a homeowner!