Common Misconceptions That First-Time Buyers Often Have
- "I need substantial down payment."
Not at all. Just about all of the first-time homebuyer
financial assistance programs provide 100% financing. 100% financing is the
most prevalent financing used by first-time buyers today.
- "I can buy a home if I have only
$300 in my bank account". Unfortunately not. The financial
assistance programs can cover all of the necessary down payment, but there
are other costs that the first-time buyer will incur. When you purchase a
home, you will need to put down a good faith deposit of typically between
$1,000 and $3,000 right at the start of the transaction. You can retrieve
this money and cancel the transaction at any time up to a certain point in
the transaction. You will also need to pay for an appraisal (between $350
and $450) and a home inspection (between $200 and $300). You may have to pay
some of the closing costs yourself if your agent has not negotiated that the
seller pay all closing costs. Many loan programs also require that the buyer
has a certain amount of money left over at the end of the transaction acting
a reserve. This is known as the lender's reserve requirement and varies for
each different loan program. My recommendation is to target a bank account
balance of at least $4,000 to $5,000 by the beginning of your transaction.
The more in your bank account, the better. Here are
Step To Getting Your Finances In Order.
- "I need to have really good
credit to buy a home." Not true, to an extent. Many of the
first-time homebuyer assistance programs will allow for a FICO score down to
620. If your credit score is below that, you probably have some work to do
to repair your credit. I advise people to get their credit score above 620
before starting the purchase process. The main reason for this is to qualify
for loan programs with much better rates and terms. See the section of this
web site on Credit Issues for a more
detailed discussion on ways to diagnose and improve credit scores.
- "My consumer debt doesn't have
much of an effect on my ability to buy a home." I wish
that were true. A little known but surprising fact is that each $100 of
monthly debt payment, whether is a car payment, credit card payment, student
loan, or personal loan, reduces a homebuyer's purchasing power by about
$15,000. Take a look at the CalHFA Qualifying Chart to see the effect of debt on purchasing power
and to see where you are positioned on this chart. If you haven't gone out
and bought that brand new car, please don't do it until you have completed
your home purchase.
- "I need to be in my job for a
long time to be able to purchase a home." In reality, you
only have to have been working in your field for the last two years. New
college graduates can get around this rule if they are working in
their field of study. If you are a self-employed entrepreneur, you need to
have been self-employed for the last two years, regardless of how long you
worked in the same field as a salaried employee.
- "A lot of these first-time buyer
programs require that I remain in the home for many years."
None of the first-time homebuyer financial assistance programs have any
requirement that you must remain in the home for any amount of time. If you
take a look at each of the First-Time Homebuyer Assistance Programs, you'll see that none of them
have such a requirement.
- "The process of buying a home is
long and complicated." Only if I haven't done a good job.
Take a look at the Home Buyer Process. It's not that complicated.
- "I can't afford to get the home I
really want." It depends on what you decide that you
really want. A quick and easy way to determine whether you have the means to
afford a home that will make you happy is to take the following two steps:
1) Look at the CalHFA Quick Qualifying
Chart and determine your approximate purchasing power. 2) Next, take a
look at the homes in your price range in this
MLS Search Of the Lowest Costing Homes In San Diego County. See anything
in your price range that you like? If so, give me a call and I'll get you
fully qualified and find out a lot more about the property for you. If you
like what you find out about the property, we can set up a time to go take a
look at the property.
- "Now is not a good time to buy".
That's right. Now is not a good time to buy, it's a GREAT
time to buy. The market has really changed over the last year. The market we
have now is known as a buyer's market. The San Diego housing market is now
jam-packed with anxious sellers who will go to great lengths to make a sale.
It has been a long time since the number of homes listed reached the current
level. It has been even longer since sellers will willing to so much for a
buyer and make the concessions they are making now. Prices seem to have
leveled out in the San Diego market with some areas doing better than
others. The correction appears to be finishing up and prices are expected to
beginning rising shortly. No one knows how long this buyers market will
last. Mortgage rates are still near all-time lows. If you are thinking of
buying but are putting it off to wait until prices start climbing, you may
miss the best buyers market of the decade. Owning the real estate in which
you live has and always will be the best investment that you can make. Go
ahead and read the attached Union Tribune
Article which discusses the 10
best reasons for buying in this market. For those who still want to wait,
you'll get a kick out of this Wonderful Poem By The Great Sales Master Zig Ziglar.
Buyer In San Diego Home Page For Financial Assistance
Here Is An
to My Next Learning Annex Class On
First-Time Homebuyer Financial Assistance
Check Out The
Brought To You By
Mark Harmon, Realtor ®
CalHFA Preferred Loan Officer
USA Realty and Loans
Brokerage Main Office
3994 Carson St.
San Diego, CA 92117