California First Time Home Buyers Checklist Property Search:
As a California first time home buyer, purchasing your first house is certainly no easy task to complete. There is so much information on your homebuyer checklist you need to be aware of. Your first consideration is typically the cost of a house, prices continue to be a driving factor in new home buyer searches. In general, real estate home prices are increasing in many areas across the nation at this time.
Getting the home you want at the price you want is what buying a house is all about. The first thing to consider is location. Where is the best place to buy with my present finances? The sliding scale between when to buy and when to keep renting can be a moving target when being calculated, however let’s take a baseline on what we know today.
Home prices are rising in Southern California but so are foreclosures in certain areas. The trick is, some areas are almost immune to huge price fluctuations. Areas with better schools, low crime rates and secure solid properties usually stay on top of the market.
Ironically this may not necessarily mean luxury homes in Malibu or Beverly Hills, it is more to do with high end “median “priced areas for families. So in short, the lower priced areas like San Bernardino County and the super high priced mansions see more price fluctuations and foreclosures that many “middle ground” high end neighborhoods.
If you have the finances to move to a higher priced area in say San Gabriel valley (San Marino) you will find less variations in price but the availability and the costs make it a difficult area to buy.
Generally speaking, many of the areas with the best schools, San Gabriel, La Canada, etc will maintain their market strength.
Where can I find cheaper homes I can afford that are in a good area?
If we take San Gabriel Valley as an example you will need to go farther out to find affordable homes. The areas around and east of Walnut CA is within the vicinity of the more affluent regions of the area yet in many cases have better prices. Walnut has one of the highest new homes for sale ratios in the greater Los Angeles area.
Can I buy a house without a realtor?
Even if you are not a first time buyer there are so many issues in the California real estate transaction that it is advised to work with a real estate professional. You can and should however perform as much due diligence yourself along with your broker or realtor.
In our industry of providing property reports for a better knowledge of the surrounding area is something every new homebuyer should look at. Simply put, ask your realtor you would like to look at all the property seller disclosure reports and read them thoroughly. As a first time buyer getting familiar with all the real estate disclosure information is key in getting the right home for your family. The first American source behind the rising cost of home prices is due in part to a shrinking real estate inventory. California real estate home prices are affected by the declining number of houses for sale in the median market.
If you are interested in buying a house and performing a property search, you are probably focused on the costs involved. Important yes, however getting the fine details of the real estate property information, seller disclosures and hidden issues are actually more important.
In buying a house, spending a lot of time on the financing cost alone may “cost you in the end”! In your property search, get into the due diligence of what is this home really all about? Getting the full real estate information on a property is the key (pun) in how to buy a house!
California First Time Home Buyer Information Real Estate Disclosure Laws
Finding out about real estate disclosure laws can open up the “mystery” in what the home buyer really needs to know about a property. You are in luck as a buyer in that California is a highly regulated state in terms of seller disclosure laws and natural hazard disclosure laws.
The driving factor behind these laws is the fact that California is itself in the middle of a natural disaster zone, due to its geographical position. Nonetheless, this shouldn’t be the deciding factor for buying a house in California. Various laws are in place to secure investment properties and protect financial interests.
In this article, we will give some tips to first time home buyers who aren’t very familiar with real estate laws in California. The first thing to consider is “what do I really know about the new home I want to buy” a California first time home buyer can look at the potential problems of a select piece of real estate before the real estate financing.
Is the property safe as far as canyon floods, fire, brush-fire, earthquake fault lines, toxic waste? Can I find out more about a property with or without a realtor?
Yes, a natural hazard disclosure statement (NHD) report can tell you about the surrounding local hazard conditions, toxic waste, earthquake zones, soil erosion and much more. A CLUE report can tell you about the specific property repairs, sewage problems and tax issues.
Note: You will need the property seller’s permission to get a specific CLUE report.
Buying a House Financing
As a first time home buyer, getting a loan is the next thing to worry about. To demonstrate our purpose, we will assume that you are earning around middle-class income by American standards. With the increasing inflation rates, it is becoming harder for the average middle-class worker to buy a house without any further financial support. As a prerequisite to buying a house; you must have a good credit history.
Credit Status
A good credit history will allow lenders to invest with confidence while lowering the interest rates. This remains significantly important when talking about a mortgage because a few percentages on the interest rates could potentially equate to hundreds of thousands of dollars. For a buyer, your credit must be clean to allow you to pay for the house.
Mortgage Rates
This is tied into the fact that inflation rates continue to increase at a ridiculous rate. So what happens once you buy your first house? Are you stuck with paying big principle taxes on applicable years? Luckily, the 26 U.S. Code 36 provides first time home buyers with a 10% credit against the imposed tax. The 10% credit is equivalent to the 10% purchase price of the home. These are very basic financial information that you should be aware of.
Disclosures
We briefly mentioned about the fact that California is a state where certain natural hazards can unexpectedly arise due to its location. California has seen a variety of hurricanes, floods, earthquakes and wildfires in its history. To real state house sellers on a mapped hazard area, they are required to disclose a form called the Natural Hazards Disclosure Statement (NHD). The hazard area includes 6 types; a flood zone, dam inundation, wildfires, home fires, earthquake fault zones and other seismic hazards.
What is an NHD zone statement?
Any California first time house buyer must be fully aware of this act in the statewide civil code. As a buyer of such a house, you must do prior research to ensure future safety of assets. Always make sure that the natural hazard disclosure source provides information that is not biased or theoretically claimed without legitimate evidence. It’s always recommended for a new buyer to make sure that the house will not be susceptible to any massive future damage. Failure to provide a respectable NHD from a seller could have many devastating consequences. This could result in the risk of bankruptcy and possibly threaten the safety of you and your family.
Make a checklist
A California first time home buyers checklist should also take advantage of ensuring that all potential sellers provide them with a Comprehensive Loss Underwriting Exchange (CLUE) report. This personal property report provides buyers with information of any insurance losses for a history of 5 years. The seller’s agent cannot order this report; only the owner of the home is eligible to do so.
Always request the seller’s agent to obtain this document as it includes crucial information for any buyer. This is exceptionally important when you are sceptical of a really good property coupled with a chance of risk from a multitude of hazards. It could be the deciding factor of whether you will want to buy the house or not.
Get the house you can afford:
If you buy a house based with your finances based on the asking price alone you are not looking at the real costs. Monthly costs outside the mortgage loan are a major expenditure to take into account. As a first time buyer you need to know what that figure is and then add some in case of an emergency. Home insurance, rehabilitation costs, unseen costs for repairs, maintenance, pest control, lawn and garden maintenance, the list goes on. The bottom line is, count on spending 1/5-1/4 of your first mortgage monthly payments as to ancillary costs for setting up and maintain your new home.
Always think about the long-term plan of the house. It is generally not recommended to not buy a property in a well-recognized area that has historically been exposed to natural disasters. New middle-class home buyers should naturally understand that they still have ways to go with their career and life. The potential of losing a property with an investment worth of hundreds of thousands of dollars could drag anyone into a slump both physically and psychologically.
As general information, any California first time home buyer seeking to buy a house must be aware of all these factors. Having a good credit history will convince lenders to give you a good loan to help you buy your first house. This is a universal real-estate theory anywhere in North America. In these times, it is extremely important that you utilize your good credit as it can help you with your mortgage loan in the long run.
When buying California real estate, there are various hazard areas that you should completely acknowledge. The Natural Hazards Disclosure Statement will provide all the details on potential hazards in relativity to the property. As a general strategy, always put your own safety ahead of any competitive prices that the sellers may be offering.
Finally, you should always ask for a Comprehensive Loss Underwriting Exchange report to grasp a good history of the property that you are considering to buy. These are some basic rules that any first time buyers should take into consideration when purchasing a property in California. Remember, there are some risks that you can take others that you can’t. Always buy a house with a long-term strategy in mind.