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Buyer’s Guide

Make offers that win

How To Make An Offer That Wins In A Seller’s Market

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It’s Not Just The Price…

Buyers are facing an uphill battle to buy a home in this current market. Having a plan to succeed is critical and knowing what to do to create an offer that makes you the early favorite in the current multiple offer market.

Its really important  to understand that the best offer is a combination of things and not necessarily the highest price. Also your offer can be amended after its is sent to make it more appealing as you understand more about what the seller needs to sell are.

How To Make A Winning Offer:

Here are steps that help.

  • Learn the market.  It’s important to understand the inventory of the homes you want to buy. What are the recent sales? How many offers were made? Did the sales price over the list price?.  Your agent should be able to guide you about the local sales.
  • Find out the seller’s motivations. This is key and really important. If you’re working with an agent, you can request that they try to find out why the seller is looking to move from the seller’s agent. If the seller’s agent is facing a lot of time pressure and needs to get the place sold ASAP, that puts you in a much better position to push for a better price. Don;t be afraid to pick up the phone and call if you don’t know.
  • Make a good, strong offer. Even when you’re making a winning offer, you want your offer as appealing and reasonable as it can be. The information you found out from the seller or seller’s agent can help. Use that information in your offer  to make your offer better. For example, you might waive certain repairs, or shorten the contingency period. Quick Tip for a Seller’s Market: A quick close (21 days) and a seller can remain in possession for a period of time at no cost can often save you money or get a favorable counter offer.
  • Don’t count on a “Multiple Buyer” counter offer. Your first offer is highly unlikely to be accepted by the seller in a Seller’s market but may be accepted by modifying the terms of your initial offer or more importantly trying to convince the seller’s agent to make an acceptable offer work with your offer. Make sure you work closely with your agent to again understand the issue with your offer when you receive a counter offer from the seller. From my experience little things that are not necessarily related to the offer price can be worked out when time is taken to understand the counter offer or addendum. Time isn’t your friend when negotiating so you should try to complete any negotiation within 24 hours if possible.
  • The Listing Agent is the Key.  If you have hired the right agent, he should be able to understand the seller’s motivations, get the information on the pricing the selling agent recommended for the house   Bottomline, the  listing agent is the gateway for your offer to be accepted. In the end selling your offer to the listing agent.  Do your homework on the Listing agent for success.

Making an Winning Offer: What is effective and works

  • Having a pre-approval letter that is 10% more than your offer price. If the home comes down to negotiating a higher price and your approval letter can;t support the higher price, you won’t win the house.
  • Buying the home as-is, and not requesting repairs. If the seller knows that their bottomline isn;t going to change after they are in contract that is helpful for them to decide to choose your offer..
  • “Clean Offer” Making the deal more complicated isn;t helpful. Stick within the current time periods for getting things done. Unless you have information that the seller wants inspection times shortened or, keep the offer “clean.”

One Last Thought

A winning offer is more than the price. More importantly make sure you have an agent who will aggressively sell you as the best buyer and is equally focused on helping buyers as well as sellers.  

Learn more about buying a lot and land

How to Buy A Lot or Land To Build a Home

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For homebuyers, there’s nothing more discouraging than house hunting for weeks or even months on end, only to conclude that there’s just nothing out there that fits your needs. Homebuyers often in the search of home think about building a home. The search turns to looking at lots for sale to build on. In South Placer for example, there are very few small/city lots for sale, the land being sold is often in rural areas and 2.3 acres or more in size.

Talk to a Custom Home Builder First

So nothing for sale is making the wants and needs and you are frustrated. Buying a lot and building is a complicated process with many moving parts. The first step should be to talk to a custom home builder to see is what you want can be yours for the budget you have. You might find building isn’t an option but finding a home you can remodel or update to your tastes is now an option. Let’s assume you found a reputable home builder that you can trust, and the budget you have is doable for the home you want built. How do I find the right lot?

How to Buy a Lot to Build On

Your going to need to work closely with your builder for the lot you need.

  • Have your Agent talk to the builder. The first step is to have your agent talk to the builder. Don’t have an agent? Most builder often work with real estate agents, ask for a referral. The Agent should be able to get the critical items for the lot search.
  • Look into financing. A construction loan is much different than a home loan. Find the local lender who understands construction loans. Your lender may recommend a lot loan too. Once you understand the financing then the next step is to start the actual search for a proper lot /site to build a home.
  • Have your Agent create a lot search for you: Don’t waste your time , get a lot search based upon the criteria you discussed with your builder. The lot search will be more efficient if you are only looking at what might work. Most MLS searches will tell you what utilities are to the site. Utilities if need to be delivered to the website can be a very large expense that may not be in the budget.
  • Consult your Builder before you make any offers. Once you have found a lot you think might work, you need to get your builder involved to validate it works for the build of your home. There are issues such as access to the lot, zoning setback, easements, the building envelope, utility costs, and more to be considered before you make an offer.
  • Make an Offer. If you do your homework, buying land to build your dream house can be very rewarding since in the end you get “your” home. However, it takes a team to buy a lot and a lot of professionals to help you make it all work.
My Offer is accepted

What Happens After Your Offer is Accepted

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You’ve found the right home at the right price. You submitted an offer, and it has been accepted. Now you are “under contract.” What happens next? Your agent that helped you win the home will manage the timeframe for performing the inspections and contingencies to help complete the purchase or advise you the cancel the purchase offer shpi;d there be any deal breakers. Here are the major items in the process from “contract to close” for a successful purchase.

1. Follow up with your lender if purchasing with a loan

Hopefully your lender already knows the offer has been accepted. However, you need to sync up with your lender and make sure the loan contingencies can be completed by the contract timeframe (typically 21 days after an accepted offer for the loan contingency in California). A conversation with your lender should get the ball rolling and make sure any documentation needed for approving your loan is being worked on. The home appraisal is one of the pieces the bank will need for the loan approval. A home appraisal helps determine how much your home is worth. The appraiser is typically chosen by your lender and scheduled by the lender.

2. Get the earnest money to the escrow company, review disclosures/reports

Your agent should be making sure the “earnest money” or deposit is given to the escrow company within 3 days in California after the offer is accepted. Your agent should also be working with the listing agent to get all the disclosures and reports available for the property. The disclosures and reports are key to helping you determine the condition of the home you are buying and useful for helping you further investigate any issues with your future home.

3. Schedule the home inspection

Inspections are highly recommended to help find any underlying issues that may affect the value of your home and how much work it needs. Even if you have a pre sales inspections including the home inspection, you should make time to review the report on the property with your agent.

4. Get Quotes and purchase home insurance

You are required by law to get home insurance when you purchase a home. Escrow will need to have proof of insurance prior to the close of escrow. Don’t let this be a last minute item, if you do it now you will be able to shop around to find the best deals.

Pro Tip: Bundling your home, auto, and other insurance can save you money.

5. Follow up/purchase a home warranty

Home warranties help protect you if large ticket items—like appliances—fail after you have bought the home. If you purchase a home warranty plan before closing, it will be included in your closing costs. Sometimes, the seller will purchase a home warranty plan for the buyer.

6. Completing the purchase

At this point, you will be roughly 14-21 days since you accepted the offer. You should have: be approved for you loan, have a home appraisal, completed any inspections, reviewed disclosures and reports, requested any repairs, and should be ready to either complete the purchase or cancel the contract. Let’s assume everything is a go and you are ready to complete the purchase. You should be working on your move to the new home. In parallel to your actual move, the real estate professionals will be working hard to get the purchase closed. You typically will see the following happening: The seller will usually ask for a release of all contingencies, and your lender will get the loan documents into escrow for signing. The seller will be signing documents to transfer the home to you. You will be signing all documents you need to transfer and purchase the home to you, bring the rest of funds and depositing into escrow that are needed to close. Once everything is done, correct and reviewed by the Escrow company for seller and buyer, the house will released for recording and transferred to you as the new owner by the escrow and title company

7. After closing

You should be transferring utilities as soon as possible into your name for the new home. Security is a big concern so you should be rekeying the home and looking ar home security and automation options as well. This is also a good time to find contractors for any work you may need or want. Hiring a maid service, pool service, and lawn service is also done after you move.

Pro Tip: Ask the Seller who they use to work on the house while they owned it. It’s often a good idea to retain the home pros that worked on the home and learn more about how and what maintenance is being done. The listing agent is often a good resource to ask if you are looking for recommendations as well.

Quick Guide to Home Insurance

Quick Guide to Home Insurance

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You searched and found your dream home, negotiated the price, and got all of your financing in order. But before you turn the key on your new home, you need to protect your investment—and everything inside of it. That means buying a home insurance policy.

Even if you have never shopped for home insurance—or if you just haven’t purchased a new policy in a while—there are a few things to keep top of mind as you navigate the task.

How much is this going to cost?

We get it—you already plunked down a gut-wrenching amount of money for the house and the fees and the closing costs. Now you have to shell out more cash for insurance? No, it isn’t fun. And it isn’t sexy. But you gotta do it. And it all starts with the premiums. In California, this has become a large expense because of the wildfires over the last few years and insurance companies raising premiums and even cancelling policies.

Pro Tip: Take the time to talk to an insurance broker and see what the policy premiums for owning a home in the neighborhood/area you are looking to move to.

Your annual premium is the amount an insurance company will charge you every year to cover your home and its contents in the event of fire, theft, etc. Every insurance company has its own way of determining annual premiums.

A few factors set your rate: the value of your home and its contents, as well as your deductible, which is the out-of-pocket amount you’ll have to pay in the event of a claim. But home insurance premiums also vary by region and company. Two home insurance policies with identical coverage and limits in two different parts of the country, or even a town, could have very different annual premiums, Bank says.

Filing a home insurance claim within the past five years also increases the amount you’ll pay.

“To an insurer, that increases the likelihood you’ll file a claim,” Bank says.

And, of course, Mother Nature plays a role. If you live in an area with a history of wildfires, earthquakes and/or live in a flood zone, you can expect to pay more.

How you’ll pay

The initial premium is typically due when you purchase the policy and when you buy payed out of escrow or your insurance agent will provide an insurance binder which provides the coverage of the home. That will cover your home and property for the first year.

Subsequent premiums can also be paid directly by you (your insurer will bill you), or you can opt to escrow the premium and have a portion of it built into your mortgage payment. Even though that bumps up your monthly costs, you might find this the best way to ensure you have enough money to cover the premium when it’s due.

Timing is everything

It’s never too early to start shopping for home insurance. Gathering quotes as soon as the contract is signed will help you understand how the annual premium will factor into your budget. You need to know all of your monthly costs.

You’ll want to choose a policy and have it paid in full at least two weeks before closing—otherwise you might face delays for closing the home and/or be insured.

Know whom you’re working with

It’s a fine idea and makes sense to shop around. An independent insurance agency or broker deals with several companies, versus captive agents who represent just one insurer. Obtain a mix of three to four quotes from both types of agents to compare premiums (even from the same companies) and coverages available.

Take inventory

As you’re packing and/or unpacking, take videos or photos using your smartphone of your belongings and store them in the cloud (iCloud, Google Drive, Dropbox, etc) as a digital home inventory. That will help speed up a claim and ensure the maximum possible reimbursement in the event of a fire, theft, or other covered disaster. Knowing what you own and creating an inventory will also help you decide which insurance policy will give you adequate coverage for your belongings, including furniture, electronics, and collectibles.

Ask about add-ons especially for jewelry and collectibles

If you own jewelry, artwork, wine, coin or stamp collections, or other keepsakes, ask about coverage and coverage limits. You probably are under insured for jewelry and collectibles with a standard homeowners policy.

Get your docs in a row

You’ll need a copy of the “insurance binder,” which details the coverage values, premiums, and restrictions. But you shouldn’t have to track down that information. Your agent should work directly with the mortgage lender to provide proof of coverage required at closing.

Understanding terms used for home insurance

Insurance and risk management terms, click the link.

https://www.irmi.com/glossary?taxonomy=alphanumeric&propertyName=tags&taxon=a

Learm more about CA Proposition 19 Property Tax Reassessment

Learn More About CA Proposition 19: Property Tax Transfer

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CA Proposition 19 Property Tax Exemptions from Reassessment

Summary

New Rules on Tax Basis Portability

With the passage of Proposition 19, a homeowner who is over 55 years of age, severely disabled or whose home has been substantially damaged by wildfire or natural disaster may transfer the taxable value of their primary residence to:

  • A replacement primary residence
  • Anywhere in the state
  • Regardless of the value of the replacement primary residence (with adjustments if “greater” in value)
  • Within two years of the sale
  • Up to three times (but without limitation for those whose houses were destroyed by fire)

Proposition 19 will supersede the old rules which limited this exemption to the sale and purchase of a principal residence within the same county (Proposition 60) or between certain counties (Proposition 90) — but only if the replacement property was of “equal or lesser value” and only one time.

Learn More

Purchases and Sales Before April 1, 2021

It’s unclear that the tax benefits under Proposition 19 apply to transactions where either the  sale or purchase of a primary residence takes place before April 1, 2021.  

Nonetheless, owners of real property that qualify under Proposition 60 or 90 can still take advantage of those features until April 1, 2021. (If you as an owner never took advantage of these and were qualified, you might be able to get a refund of taxes already paid).   

New Rules on Intergenerational Family Transfers and Family Farms

Proposition 19 also changes the rules on exemptions from reassessment for intergenerational transfers by limiting the exemption to the transfer of a primary residence to a child (or grandchild) only when the property continues to be used as a family home by the child (or grandchild), and even then, if the divergence between the taxable value and the actual value is too great, a partial increase in the new taxable value will be imposed. Proposition 19 also includes provisions that would allow the transfer of a family farm to retain its taxable value.  These new rules apply to any purchase or transfer beginning February 16, 2021.

Questions and Answers

Question 1. What are the most significant changes made by Proposition 19 regarding the transfer of the taxable value of a principal residence?


Answer. Proposition 19 makes three significant changes to the portability of one’s tax basis from the sale of a principal residence to a replacement principal residence.

First, it allows a seller of a principal residence to transfer the tax basis of that principal residence to the purchase of a replacement principal residence anywhere in the State of California.  Under prior law, the seller was limited to transfers either within the same county (under Proposition 60) or between a limited number of counties that specifically permitted such taxable value transfers (under Proposition 90).

Second, it allows the transfer of the tax basis of the sold principal residence to the replacement principal residence regardless of value with certain adjustments to the tax basis if the replacement principal property is of “greater value” than the sold principal residence. Under prior law, only transfers of “equal or lesser value” were eligible for the exemption.

And third, Proposition 19 permits such transfers up to three times (but unlimited for those whose homes were destroyed or substantially damaged by fire). Prior law allowed such transfers only one time.

Question.  Can a seller under Proposition 19 of a principal residence transfer the tax basis of the sold principal residence to the purchase of a principal residence anywhere in the State?

Answer. Yes. 

Question . Can the replacement property can be of greater value?

Answer. Yes, Proposition 19 allows the transfer of the existing taxable value of a primary residence to any primary residence “of greater value.”  

Greater Value is defined as: The replacement residence is of greater value.  The taxable value of the replacement primary residence is calculated by adding the difference between the full cash value of the original primary residence and the full cash value of the replacement primary residence to the taxable value of the original primary residence.

Ex:        Original Primary Residence (OPR) taxable value . . .             $400,000

             OPR sold for      . . . . . . . . . . . . . . .                                              $900,000

             Replacement Primary Residence

(RPP) purchase . . . . . . . . . . . . . . .                                                        $1,000,000

Difference between sale price of OPR

and purchase price of RPP is . . . . . .                                                     $100,000

Taxable Value of RPP is $400,000 plus $100,000…                         $500,000

Question.  Who does Proposition 19 apply to?

Answer. Proposition 19 applies to a seller of a principal residence who is over 55, severely disabled, or whose home has been substantially damaged by wildfires or other natural disasters.

While Proposition 19 states that it applies to persons who are over 55 years of age,  Revenue and Taxation Code Sec. 69.5 defines this to include those who are 55 years of age or older. It is this definition that will likely determine eligibility.

Question. Who qualifies as “severely disabled?”

Answer. Any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, per California Revenue and Tax Code Sec. 74.3.  While there is no definition within Proposition 19, the meaning of this phrase is likely the same as contained in the California Revenue and Tax Code.

Question. How many times can a qualified homeowner take advantage of this tax basis transfer?

Answer. Proposition 19 allows both those over 55 and the severely disabled to use this exemption up to three times.

Question. How often can homeowners who are victims of wildfires or other natural disasters use this exemption?

Answer. Proposition 19 does not limit the number of times homeowners, who have had their principal residence substantially damaged due to a qualifying wildfire or other natural disaster, may transfer their tax basis whenever such event occurs.

Question. When does this portion of Proposition 19 go into effect?

Answer. Beginning April 1, 2021, Proposition 19 applies to the transfer of one’s tax basis anywhere in the State of California regardless of value.

Question. I’m over the age of 55 and want to sell my home now. Under Proposition 19 do I need to wait until April 1, 2021, to purchase another home? How long can I wait?

Answer: Current law prior to Proposition 19 states that the purchase of a new home must be made within two years of the sale of the old one. If you have already transferred your property tax base once, you will be ineligible to do so again until after April 1, 2021. While this question is ultimately an issue that will have to be worked out in the implementation process we believe that as long as either the sale of an existing home or the purchase of a new one occurs after April 1, 2021 that the transaction will be eligible for the tax benefits under Proposition 19 as long as both transactions were completed within two years.

If you wish to obtain the tax benefits of Proposition 19 for a transaction that closes prior to April 1, 2021, whether it is buying or selling a property, you should seek the advice of a qualified California real estate attorney or tax advisor. 

Question. Can a replacement property be purchased prior to the original primary residence being sold?

Answer. Yes. This is how the current rule under Proposition 60 operates, and Proposition 19 uses nearly identical language.

Intergenerational Family Transfers

NOTE:  This is only a guideline from the California Association of Realtors. You should seek or consult with a qualified estate planning or real estate attorney to see how intergenerational family transfer apply in your situation.

Questions and Answers

Question.  If I pass my principal residence on to my children or grandchildren, will the property be reassessed?

Answer. So long as the property continues to be used as a Family Home (primary residence), and the transferee claims the homeowner exemption, the property tax basis will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.

Question. If the property is transferred to a child or grandchild and used as a Family Home, what will the new tax basis be if at the time of transfer the property value is less than $1M over the original tax basis?

Answer. The new tax basis will remain the same as the original tax basis.

For example, if the original tax basis was, let’s say, $500,000, and at the time of transfer the property is valued at $1.2 M, then the tax basis will remain at $500,000. This is because $1.2M is not more than $1M over the original taxable basis. 

Question. If the property is transferred to a child or grandchild and used as a Family Home, what will the new tax basis be if the at the time of transfer the property value is more than $1M over the original tax basis?

Answer. If the property at the time of transfer is more than $1M over the original tax basis then the new tax basis will be the value of the property at the time of transfer minus $1M.

For example, if the original tax basis was, let’s say, $500,000, and at the time of transfer the property is valued at $2M then the new taxable value will be $1,000,000 ($2M minus $1M). You use this formula because the value of the property at time of transfer was more than $1M over the taxable basis.

Question. Are Family Farms included in Proposition 19?

Answer. Yes, Family Farms have the same exemptions as Family Homes (principal residences).  “Family Farm” means any real property under cultivation or which is being used for pasture, or grazing, or that is used to produce any agricultural commodity. It does not require the transferee to live in the property as a principal residence.

Question. When do these family transfer rules take effect?

Answer. The family transfer rules take effect February 16, 2021. The transferee would have to claim the homeowner’s or disabled veteran’s exemption within one year of the transfer to obtain the benefit of the family transfer tax exemption. 

Question. Intergenerational transfers previously exempted not only the transfer of the tax basis of a primary residence but also up to $1 million dollars of all other real property. Is that exemption still available under Prop 19?

Answer. No. Prop 19 allows only the intergenerational transfer exemption only for the primary residence and only if it continues to be used as a primary residence.

 

Final Thoughts

This article is  intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Readers who require specific advice should consult an attorney.   

finding the best lender

How To Find The Best Home Lender

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Before buying a home it’s important to understand your finances to buy a home. Often friends and family can be a great resource for finding a local lender for a home loan. Here is some advice and how to find the best lending pro to help you purchase a home if you are using a loan to buy.

When you buy a home, you’re in it for the long haul. You’ll have a mortgage payment for 15, 20 or 30 years, so it’s smart to understand what you need, the process, and picking the best loan officer to help you get a loan for your home.

How to Look for a Lender/Loan Officer

Finding a mortgage lender involves more than just getting a good interest rate; you want to work with the best mortgage companies, staffed by professionals who will guide you through the process. However ultimately you want to work with a loan officer/loan professional that you trust, can communicate effectively, and answer all you questions.

Before you start the search for your personal banker/lender/loan officer, you will need to do some work.

The Home Loan Journey

To get a jump-start on the mortgage loan process, use these tips to help you find the right lender and the right loan for you.

1. Review Your Credit and Income

Not everyone can qualify to buy a home; you have to meet certain credit and income criteria to assure mortgage companies you can repay the loan. The first step is to look at your credit score which is currently a feature in a lot of banking apps like Wells Fargo, Chase, Bank of America, etc

A low credit score signals that lending to you is risky, which means a higher interest rate on your home loan. The higher your credit score and the more on-time payments you make, the more power you’ll have to negotiate for better rates with potential lenders. Generally, if you have a score under 580, you’ll have a tough time qualifying for most types of mortgages. Don’t be discouraged by your current credit score if you think its too low. A good lender will have local resources to help you improve your credit score through “credit repair.” At this point just know what your approximate credit score is.

The lenders will look at your monthly bills and payments you make every month. There are ratios called “debt to income’ that need to be looked at to make sure you can afford to make the payment. Next, try to pay off high-interest debts and lower your overall level of debt as quickly as possible. the lower the “debt to income” the more credit worthy you are for a home loan. Paying off credit cards and recurring loans before you buy a home will also free up more money for the down payment.

2. Know the Types of Home Loan Lenders

Understanding the major players will help you navigate the crowded lending field. Here are the most common types of home lenders:

  • Credit unions: These member-owned financial institutions often offer favorable interest rates to shareholders. Most like.y you will have to join the credit union if you obtain a loan through them.
  • Mortgage bankers: They work for a specific financial institution and package loans for consideration by the bank’s underwriters.
  • Correspondent lenders: Think local mortgage loan companies that have the resources to make your loan, but rely instead on a pipeline of other lenders, such as Chase, to whom they immediately sell your loan.
  • Savings and loans: Once the bedrock of home lending, S&Ls are now a bit hard to find. But these smaller financial institutions are often community-oriented and worth seeking out.
  • Mutual savings banks: Another type of thrift institution, like savings and loans, mutual savings banks are locally focused and often competitive.

3. Find the Right Lender and Loan Officer to Work With

It’s easy to get a rough idea of what the home loan rates are by simply Googling “30 year home mortgage rates.” It’s also to find a “home loan calculator” to see what you can roughly afford for the budget for home. You can spend time on search looking for the “best rate for home loan.” Just be aware the rate offers out there are usually for a perfect buyer with excellent credit, 20% down, etc… In the end until you go through the credit application, credit check, and funds available for down payment and closing costs you won’t have an accurate picture of the actual cost of owning a home with a loan.

I recommend you connect to friends and family to find a good local lender and loan officer to work with. If you have a agent for buying a home they can provide a solid recommendation for a local lender to help you. The world of lending is ultra competitive and the best rates are often available to any lending professional to get you the best loan for your home buying.

It’s more than just the rate and terms for your home loan, it’s important that your lender is used to working with buyers like yourself for a home loan. Whether you are a first time buyer, a person with undocumented income, self employed, etc it helps to use a loan officer who can package you up for the best loan for your home buying situation.

4. The Right Questions to ask Your Lender and Read the Fine Print

Once you have some names, it’s time to ask:

  • How do you prefer to communicate with clients — email, text, phone calls or in person? How quickly do you respond to messages?
  • How long are your turnaround times on preapproval, appraisal and closing?
  • What lender fees will I be responsible for at closing? (Fees may include commission, loan origination, points, appraisal, credit report and application fees.)
  • Will you waive any of these fees or roll them into my mortgage?
  • What are the down payment requirements?

5. Get Ready to Home Shop With a Pre Approval Letter

Once you find a great lender, you need to get a pre approval letter to go home shopping. Getting a mortgage pre approval letter before you start looking at houses will tell Seller’s you can buy a home when you make an offer. The letter shows the seller that you’re a serious buyer whose loan is likely to close. It’s evidence that a lender has evaluated your finances and figured out how much you can afford to borrow, and therefore how much house you can afford.

Getting preapproved now will also save time later. When you’re ready to make an offer on a home, lenders will already have the information they need to process your home loan.

To get pre approved, you’ll have to provide your lender your financial information. Here’s a list of what a lender will typically ask you for:

  • Social Security numbers for yourself and any co-borrowers
  • Bank, savings, checking, investment account information
  • Outstanding debt obligations, including credit card, car loan, student loan and other balances
  • Two years of tax returns, W-2s and 1099s
  • Salary and employer information
  • Information about how much of a down payment you can make, and where the money is coming from

Once you get pre approved always ask what could help you get a lower payment. Also ask if this is the best rate they can provide? Ask if you should lock the rate and if its costs you anything to lock the rate, and how long the lock is good for.

Principal and interest payments on a mortgage aren’t the only costs of buying a home; you should ask your lender about others, including closing costs, points, loan origination fees and other transaction fees. If you’re unsure of something, ask for an explanation. I recommend prior to shopping for home you understand the total cost of owning a home on a monthly basis.

Final Thoughts

Although there are a tremendous amount of resources on the internet for “how to” and “learn more” about buying a home with a loan. Don’t forget to rely on family, friends and real estate agents to help you get started to find the best loan officer to work with you. Rates are in general very competitive and you should be able to determine if the rate and terms of your home loan is fair. However working with a loan officer who communicates well, answers your questions along the way, works hard for you goes a long way to help you succeed in your goal of owning a home.