September 15, 2016
Home Buyer Tip Video
Home Buyer Tip Checklist
When purchasing a home it’s good to have a road map as well as resources for information. This video on Obstacles top buying a home is an essential home buyer tip resource.
Jacqueline Carlisle: I am Jacqueline Carlisle, executive director, NID Housing Counseling Agency.
Question: What are the biggest obstacles to buying a home?
Home Buyer Tip #1 Overcome Intimidation
Jacqueline: One of the biggest obstacles is intimidation. A lot of people don’t realize they’re intimidated by the process. They’re intimidated about engaging in something new. There’s a lot of information out there, sometimes too much information, and the entire process just becomes a bit challenging for people.
Getting over the intimidation factor is one of the key aspects, or key barriers to people purchasing a home. That can only be done through education. The other two primarily are credit, and down payment or closing cost, so credit and savings.
Home Buyer Tip #2 Financial Literacy
Question: What is the most important thing a person can do to become financially literate?
Jacqueline: Availing themselves to the education opportunities that are available, and knowing and understanding the true cost of home ownership. The total cost of home ownership, not just the price of your mortgage payment, or the cost of your mortgage payment every month. Not shopping for price as in payment, but shopping for the overall cost of home ownership.
Home Buyer Tip #3 Understand the Steps to Homeownership
Question: What are the steps to home ownership?
Jacqueline: The steps to home ownership are generally first and foremost, educate yourself about the process. Secondarily is, make sure you have stable employment. Make sure you’ve been employed. Generally, people look for at least two years of stable employment, because you feel more financially secure, and so will the lender if you’re obtaining a loan.
Home Buyer Tip #4 Know What’s on Your Credit Report
One of the next steps is to know your credit history. Know what’s on your credit report, because what you perceive is on your credit report, and often times what is actually on your credit report is different. There may be errors, there may have been mistakes, and that needs to be addressed, because you want to present your best face forward when you engage with a real estate professional, or a lender.
Home Buyer Tip #5 Have a Budget
Have a budget, and define your needs versus your wants. Know how much you have available to spend. There are lending guidelines to what percentage of your income should be made available for housing. Most lenders feel comfortable with about 28 percent, but you need to also keep in mind what you feel comfortable with. It’s knowing your overall budget, and really the total expenditures that you’re making, or that you’re expending each month.
A lot of people don’t write that information down, so they really don’t understand what their budget is. The income, as well as their expenses. Budgeting is going to be one of the primary keys. Research as much information as you can. When you feel like you’re equipped with a lot of information, you’ll do a better job in engaging professionals, and in going on this path.
Home Buyer Tip #6 Get Pre-Approved
Pre‑approval, that’s when you go to the lender and actually find out how much they say you qualify for. When you’ve done your budgeting, you’ve designed a model of how much you feel you may be comfortable with, and understand what you have available for housing expenses. A lender will have to make that decision.
There are other requirements that you need to know about, and only a lender can provide you with that information. It’s getting pre‑qualified. It’s often better to even get pre‑approved, pre‑qualification generally entails a view of your pay stubs, your income, and your budget. Your expenses, how much your outgo is every month, but it’s not verified.
When you go through the pre‑approval process, the bank actually verifies that information so that you’re assured what you’re actually qualified to buy. With the pre‑approval or pre‑qualification, it then equips you with the information, again, that you need to know what type of home you can look for, because you now know how much that you have available that you can buy, that you can obtain a loan.
Home Buyer Tip #7 Know Your Priorities
Know what your priorities are. That’s one of the main steps to home ownership before you actually start looking at homes. You’ve already gotten your credit in a place where it needs to be, or you know and understand what that looks like. You have your budget in place, you’ve been pre‑approved, but you have priorities as well. Is it being close to your child’s school? Is it being close to your employment?
Know and define what that is, and that’ll help to narrow your search. You want your search to be narrowed, and focused, so you’re not looking everywhere. When you engage with the professional, you can lead them into the certain aspects of communities that you’re looking for. They’ll be able to find a proper fit for what you’re looking for when you actually start the home search. Information is the key. You will engage with a professional, and that’s next, actually, in line of what you need to do before you start that search for the home. Start the search for the professional that you want to work with. That will be a licensed real estate practitioner in the state of California.
Home Buyer Tip #8 Know Who is Representing You
The California Department of Real Estate [now the Bureau of Real Estate]actually keeps records on these practitioners. One of the important aspects of this whole navigating this system is to be able to trust the provider, or the practitioner that you’re working with, and they provide tools where you can look up the license history of the person you’re working with.
That’s important for you to understand, if this person has had any disciplinary actions, that you feel comfortable with the public information that’s readily available so that you can make your choice. You should interview professionals, as well as interviewing the lending professionals we just spoke about, but definitely interviewing the real estate professional, because you’re going to spend a lot of time with them.
You’re going to be sharing your personal information with them, and you need to feel comfortable. You’re giving them a lot of information. You should have a lot of information on them, as well. With that, you’ll be equipped to start your search.
When you select which agent you’re going to work with. I think what people fail to realize when they go along this road is there’s certain relationships that you have with licensed professionals, and you should discuss that with them, also.
If there’s only going to be one agent representing you, if you’re going to go out on your own and bring different properties back to certain agents, just to be on the same page so that you have an amicable relationship, you need to understand the terms of agency and what your engagement looks like with this real estate agent.
That actually, you have given them the criteria, because you have your goals, and your priorities, and your budget. They’ll show you properties that fit within those parameters, and at that, you’ll find a property, and then it becomes one of the most difficult processes is the contract process, and what that looks like.
Home Buyer Tip #9 Understand the Contract
There’s a lot of forms you’ll have to sign. It’s important that you do not sign these forms in blank, that you understand what these forms are. Sometimes, it’s customary practice for a practitioner to make forms available to you that are in blank, and tell you to read them later, and then review them. Generally, people don’t go back and review them.
It’s important to take your time, and do the research, and understand the terms within the contracts, and understand the contractual relationship that you’re being engaged with when you’re actually going through this long and kind of arduous process, but it’s worth it in the end.
Home Buyer Tip #10 Get a Home Inspection
One of the important aspects, after you enter into a purchase contract with the home, is the home inspection. We advise home inspections for all of our clients because it’s a part of the process where an unbiased person is actually looking at the home, and letting you know any items that they see that may be a cause for concern, that you need to look further into, or get other specialized inspections on the property.
Your inspection period will be important to have that written within the contract, because that’s going to be your checkpoint to make sure that you really want to purchase this home. You may find out some things during the process of the home inspection where this home may not be the right home for you.
There’s also an appraisal report that is done. The appraisal report is what will tell you the valuation of your property. It’s done by, again, a state licensed appraiser, a certified appraiser, and it’ll let you know that what you’re paying for this property, the property is really worth it. It’s important that you get that, as well.
In some cases, the appraiser will come up and have a valuation that’s lower than your actual offer price, or your contract price, so you may want to renegotiate.
Home Buyer Tip #11 Negotiate
Speaking of negotiation, understand that an engagement with your real estate practitioner, that commissions are negotiable, as well.
That’s a conversation you should have, and feel comfortable with the fee that you’re paying them, also. Throughout the transaction, just know and understand that you’re in control of the transaction. Nobody else is in control. They work for you. They’re there because they’re the experts to provide you with information along the road, but you make the final decision, and you have to be comfortable with that.
Home Buyer Tip #12 After the sale: Get help if you need it.
Once they turn the keys over to you, there’s no landlord anymore. You’re responsible for it. If you equip yourself with the right research, and make sure that you’re financially fit, and prepared, and have educated yourself about the process, and taken your time to interview professionals, and understand the contracts that you’re reading, the road to home ownership will be a lot smoother.
Post‑purchase approach really focuses on a couple of areas. If you’re going to do home renovations, if you’re looking to refinance, but as well as possible mortgage delinquency because of a hardship. Know and understand the important aspect of post‑purchase is that there is assistance there for you.
If you have difficulties, or feel as though you have difficulties making a mortgage payment, it is crucially important that you contact your servicer, your lender, because they’re there to help you, or a HUD‑approved housing counseling agency who’s there to help you as well.
There are some solution options out there which people don’t generally know about, and if you’re not in contact with your lender, they don’t know how to help you. If you’re looking for somebody to work with you alongside with your lender, it’s important to contact the housing counseling agency.
Home Buyer Tip #13 Get the most out of homeownership
Question: How can someone get the most out of home ownership?
Jacqueline: You can get the most out of home ownership by buying what you can afford. First and foremost, affordability is one of the biggest obstacles that people experience in not getting the most out of home ownership. Secondarily, it’s property maintenance, and repair, and really knowing and understanding that it’s important for ongoing maintenance of your property, so you don’t have big shocks or unexpected expenses.
Budgeting is key to get the most out of home ownership, because you budget for the maintenance, and the repairs, and the long‑term things that have to be done to the property to keep it well‑maintained. Also, energy efficiency upgrades are important, to make sure that you’re not losing money, hard‑earned income that you’re paying for, that’s going out the doors or windows because the small things aren’t taken care of.
I think the thing that we counsel people about and we talk to people about is getting the most out of home ownership. Your home should be a place where you feel comfortable, and that you can enjoy. It should not be a cause or factor of stress in your life, unnecessarily, and with the proper planning, and equipping yourself based on the affordability, and the overall cost of homeownership.
I can’t stress that enough. Understand the importance of that. Your house really can be a beautiful home.
Home Buyer Tip #14 Homeownership Counseling
Question: Why is homeownership counseling more important than ever?
Jacqueline: It’s more important now because there’s a lot of information out there. There’s a lot to navigate. There’s a lot of incorrect information out there, due to the recent housing crisis, and people are afraid and uncomfortable. They don’t know which direction to turn to.
If you can turn to someone who’s unbiased, and not a part of the transaction, they’re not getting a commission. They don’t have a stake in the transaction, and they’re just there to provide you with information, it can be helpful in developing into a relationship they trust where you feel more comfortable making a decision.
The education that’s provided, as well as the one‑on‑one counseling is really instrumental in your engagement with real estate practitioners, and in your quest for homeownership, but really to help you navigate through the bulk of information that’s out there is why housing counseling is key.
Home Buyer Tip #15 NID Housing Counseling Agency
Question: What does your organization do?
Jacqueline: NID is one of the 26 national HUD approved intermediary housing counseling agencies. We have 54 branches in 22 states, and we’re primarily focused on providing education and information to underserved communities.
We’re located in cities with high minority populations, and our goal is to be not only service providers, meaning in which we engage with the public and private sector in bringing programs, housing‑related programs to communities that are generally underserved. Programs that are designed for them, we make sure that it’s accessible to them by being that service provider who provides the culturally competent counseling education services.
Housing‑related information, whether you’re a potential home buyer, a homeowner, a tenant, is the information, the real estate and housing‑related information that we provide to consumers, entities, the government, and whoever touches the underserved marketplaces who don’t really have readily available access to this type of information.
Question: What sort of resources can you suggest for those interested in purchasing a home?
Jacqueline: The main resource I would provide to them is HUD, the Housing and Urban Development, and going to their website or visiting one of their local offices, because they are the housing entity for the United States government. They house the information on various programs, the majority of programs that are available.
Their website is full of information, and it’s segregated by state, so you can click on the California link and see what programs are available in your area. Every city also has different programs that are available. When I say programs, I mean down payment assistance programs, maybe closing cost assistance programs, educational offerings.
Things that you may not necessarily know about, or your real estate practitioner may not know about, that you can avail yourselves to. The local city government has programs for you, the state housing finance agencies also have programs as well. They’re generally a great source of information, as well, on your quest for home ownership.
For more information about purchasing a home contact Jeff Green, REALTOR®