Looking to buy a new home? Maybe you never bought a property before and this is your first time? Then someone most likely has told you already that “You should wait to buy a home until prices or interest rates are lower”. But here’s the thing, the right time to buy a new home is when the time is right for YOU. It’s actually nearly impossible to time the market, while the change in rates may just cause more competition and higher prices for buyers. Find your dream home and make it YOUR home,with the help of a great realtor and lender who can guide you through the process!
There are a handful of other home buying myths out there. Let’s take a closer look at them and I am sure I will be able to defeat them right here right now:.
You have to put 20% down to purchase a home.
No you don’t. There are some down payment assistance (DPA) programs like CalHFA, GSFA’s that are available for the purchase or refinance of a primary residence in California. The DPA can be used towards down payment, closing costs, or to reduce the principal on the first mortgage loan. These programs are designed to be flexible and accessible, with no requirement that the applicant be a first-time homebuyer to qualify and with very generous income limits, much higher than you might think. Plus, borrowers with income at or below 80% of the Area Median Income may qualify for additional features, such as improved interest rates, lower mortgage insurance coverage requirements and more DPA assistance. Also, first-time home buyers and low-income borrowers can put down as little as 0% to 3.5%. How? You may wonder. VA or FHA loans might help you with that. FHA loans and VA loans are both types of government-backed mortgage loans that offer an affordable alternative to conventional loans. The government simply insures these loans, which lowers the risk for the lender and allows them to offer more attractive terms, such as better rates or less stringent credit requirements for borrowers. Those who struggle with the down payment may hugely benefit from both FHA loans and VA and make the dream of homeownership come true. Check if you’re eligible for both, and if yes, go with the VA loan if you can. FHA loans come with a minimum down payment of 3.5%. On a $500,000 home, this is equal to $17,500. However, if you have a credit score below 580, you’ll need to put at least 10% down – $50,000 on a $500,000 home. But amazing news, a VA loans don’t require any down payment at all, which is the biggest benefit of a VA loan.
Your credit score has to be over 640.
So, while CAlHFA and GSFA assistance requires minimum credit score of 640-680, depending on the program, to qualify for an FHA loan, you’ll typically need a credit score of at least 580. However, in the event of you willing to put down 10% or more, you may be able to find a lender that accepts applicants with scores below 580. The VA doesn’t set a minimum credit score for VA loans, but many lenders have their own limits on which scores they’ll allow. Consult with a trusted lender on the mortgage rates and requirements to see what you’re eligible for.
You have to pay your real estate agent when you buy a house.
In California, as in most states across the country, the seller is typically responsible for both the selling agent and listing agent commissions. This is negotiable, but these commissions are usually paid at closing, out of the proceeds of the sale. Real estate agents are typically paid via a commission structure. This means that the buying and selling agents are paid based on a percentage of the sales price of each transaction they are involved in. While the buyer’s agent gets paid by the seller, the buyer’s agent holds fiduciary duties to the buyer and protects their clients’ best interests by helping them find homes that fit their needs and budget by leveraging their knowledge of market trends to help them get the best deal possible. When you find an agent that seems to be the right fit and who you trust, your agent will make sure to take care of the following tasks:
● Coaching a client on current market conditions.
● Helping the buyer narrow down the type of home, price range, neighborhood, etc.
● Providing a buyer with listings to review that meet their criteria.
● Coordinating to tour listings and educating their buyer on the home and surrounding neighborhood.
● Understanding the market conditions and comparable local sales and advising their buyer on offer terms.
● Putting together and presenting an offer to the listing agent and seller.
● Negotiating with the seller and/or listing agent to determine a mutually agreeable sale price that would make a fair deal.
● Attending the home inspection and (sometimes) the appraisal as a buyer representative.
● Ensuring all deadlines are met, and the loan remains on track for closing.
Buying a property comes with a lot to handle. Ask around, get referrals, meet with several agents and see who you click with the most. Ask questions, request for market analysis, get a sense of their knowledge and experience. And once you find the one and feel confident about being in good hands, go with them! Good real estate agents work really hard for their clients and you will know that once you start building a rapport and moving along with the process. And of course, make sure to enjoy the home buying journey, it’s very exciting!
