For many of us, that first time was many moons ago. It was full of drama, excitement, unknowns, and adventure. We worried about it, but probably even bragged about it a little bit afterwards. And now, many of us chuckle over it as something that we were pretty naïve about.
Yes, buying your first home can certainly be a lifetime milestone. What’s that?? You thought this was about something else? But – this is a REAL ESTATE column… what were you expecting? Well, now that I have your attention, let’s talk about a few things to keep in mind as you consider taking your first leap into property ownership.
First of all, you aren’t alone in this. Navigating the waters of making the purchase is something that most people don’t do more than a few times in their lives. So, first-time buyer or not, having the help of a professional team, with a knowledgeable and motivating coach heading up that team, is critical. Your team will include, among others, a mortgage loan representative and a title company representative, and your “coach” – who will be your real estate agent. In fact, having that coach in place early on will help you in making the right choices for the other members of your team.
I’ve discussed the importance of having a good match with your REALTOR® before, so I won’t rehash that here. But suffice to say that a first-time buyer needs an agent who is patient and a good “teacher” – one who will provide a good understanding of the process. The best way to find an agent who is a good match is to speak with friends and family about experiences they have had. Even if your network is not local, if they can recommend a good agent outside of your geographic area, that person will help you find an equally good agent in your home-shopping neighborhood. It is rarely a good idea to use the “second cousin of your brother-in-law’s mother” just because they are family. Your agent must be one with whom you have a great professional relationship, one whom you trust, and one who will be there for you when the going gets tough.
Your agent can help you select a title company and also help you locate a lender with a good reputation. You can rest assured that these team members are not receiving any compensation or kickbacks from one another, as that is strictly prohibited by federal law, and few of us are willing to put our livelihood on the line just to get a few extra bucks from an illegal referral.
If you are planning to finance the purchase (via a mortgage), it will also be important for you to have your down payment together. Although there are plenty of loan programs out there that require less cash down, the “gold standard” in lending will be for you to have at least a 20% down payment on hand, and the more cash, the better.
While in many parts of the Bay Area market cash buyers are still a dominant force, in some areas we are seeing the frenzy of cash begin to slow, and now, buyers who are financing their purchase are finding the competition of recent months beginning to ease. However, it will take more than the down payment to be able to complete your purchase, since the buyer is also responsible to pay a share of “closing costs,” or costs associated with the escrow and the mortgage. Be sure that these funds are “seasoned” (meaning they have been in the bank for a number of months) and traceable – so a lender can track where the funds came from.
Next month: Locating that property and writing your offer.
A Bay Area native, Mark Penn has been a REALTOR® with Coldwell Banker since 2004. He is also active in animal welfare, and is a former educator, facilitator, and air traffic controller. Mark can be reached at mark@MyHomeInSonoma.com.
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