More Americans – more than 15 percent – say they are feeling confident about their ability to purchase a home, according to Fannie Mae’s January consumer housing survey.
Interest rates, which had been rising, have taken an unexpected U-turn. And the growth in housing prices decreased to its slowest pace since 2012, according to real estate data firm CoreLogic.
These trends are national and the Bay Area is a unique housing market. But if you are one of those folks considering purchasing a home this year, you’ll want to make sure you’re prepared.
1. Get Pre-Approved for a Home Loan
Before you scour the Internet looking for homes to buy, before you case every open house in town, before you start planning what colors you’ll paint the baby’s room, talk to a home loan specialist.
Unless you have enough cash on hand to purchase a home outright, sellers will want to see proof that you qualify for the mortgage needed to buy their property.
Maybe you’ve filled out some form online and think you know how much you can afford to spend on a house. Or maybe you’ve been told you don’t qualify for a home loan at all.
Until you’ve spoken with a competent licensed professional, you won’t have all the information you need.
Anyone can qualify a buyer with lots of cash in the bank, high credit scores and a secure work history. The rest of us need experienced loan officers who are aware of all the programs that don’t fit the cookie cutter mold.
Are you a veteran? A Native American? A first-time homebuyer? You may qualify for programs designed especially for you.
Are you self-employed? On the job less than 2 years? Do you have past credit problems? You’ll need professional guidance to secure financing for your new home.
Even if the loan officer says you don’t qualify for the mortgage you need at this time, he or she can help you form a plan to save money, repair your credit and set you on the road to future homeownership.
2. Get Clear About What You Are Looking For
When asked what they are looking for, most people will respond with something like, “we want four bedrooms – five would be nice – with one bedroom and a full bathroom downstairs, a gourmet kitchen, a three-car garage and in a nice neighborhood.”
There are likely lots of homes in nice neighborhoods that have four – or even five – bedrooms, including one downstairs, gourmet kitchens and three-car garages. Most of them won’t suit you.
In fact, the home you choose may be lacking in one or more of these particulars. That’s because most people don’t want features. They want a lifestyle.
Maybe you are looking for enough bedrooms that each of your children has his or her own, a space for your mom when she comes to visit, a kitchen that will allow you to cook for a crowd, and a workshop where you can pursue your hobbies.
Maybe you’ll find a great home in a great neighborhood, but with three bedrooms plus a loft, which can be easily enclosed to make a fourth bedroom. Maybe that home has a big kitchen with lots of counter space that just requires an upgraded oven. And it also has a detached structure with living space for mom and a workshop in back.
Finding the right property for you and your family is about more than clicking boxes on a search engine. You don’t want to miss out on the perfect home because it doesn’t fit every item on your list.
3. Figure Out Your Timing
Start by counting backwards. If you want to move as soon as the kids get out of school in June, you’ll need to be in contract on your new home in May.
That means you’ll want to start house hunting no later than April.
You may need a month or so to get approved for the right mortgage, especially if you don’t already have all your paperwork in order.
If you have a property to sell before you can buy, you’ll also have to give yourself time to get that home on the market and in contract.
On the other hand, if your plan is to move in the fall, you may want to put off looking at homes until summer.
4. Find a Great Realtor
In fact, you may want to start with this step. A great Realtor can refer you to an excellent loan officer, help you articulate what you truly want in your new home, and plan a strategy for success in achieving your goals.
When it’s time to shop, they will help you find the right home, negotiate price and terms, advise you about information derived from inspections and disclosures, and navigate the closing process.
Great agents have knowledge, skill and personal integrity, plus the temperament to work well with people.
Only agents who are members of the National Association of Realtors, the California Association of Realtors plus their local Multiple Listing Board can use the designation Realtor.
If you don’t already have a trusted agent, ask for referrals from friends, neighbors, family members or professionals in related fields, such as your banker, attorney or insurance agent.
Or stop by open houses and “watch the agent in action.”
Interview any prospective Realtors to ensure he or she is someone you have confidence in and can work with in buying your new home. You can also check out their professional standing on the California Department of Real Estate website, www.dre.ca.gov.
If you are thinking about purchasing a new home in 2019, get started today!
Cher Wollard is a Realtor with Berkshire Hathaway HomeServices Drysdale Properties in Livermore.