It is home-buying season! Simone is talking with CEO and President of Catalyst Mortgage Brandon Haefele about what steps to take if you want to buy a house this summer.
1. Determine your down payment: How many dollars for a down payment is the foundation of purchasing a home. If the money is in high-risk investments like speculative stocks, you may want to consider moving them to safer ground to avoid a market slide like the downturn in recent weeks that would hurt your purchasing power. You want to make sure those down payment dollars are available and easy to access. Also, pay off or at least down as much debt as possible (car loans, credit cards, etc.).
2. Check your credit report and look closely for errors: An excellent credit score is 750-850, and a good credit score is 700-749, according to Experian. Your credit score will determine your interest rate and, in turn, your monthly mortgage payments.
3. Get pre-approved for a mortgage and know how much house you can afford: In general, many real estate officials say homebuyers should spend about 28%-32% of their gross income (before taxes) on housing every month, which includes property taxes and insurance. But some homebuyers can spend more, depending on their financial situation, up to 45%.
4. Ask your mortgage professional if you qualify for certain home loan programs: For example, the California Housing Finance Agency (CalHFA) and the Veterans Administration have programs to help with the down payment, making homeownership more affordable and easier. The household income limit for CalHFA programs is $150,000 in the Sacramento region.
5. Look for communities and neighborhoods that fit your needs and wants -- and your pocketbook: If you dream of living in the Fabulous 40s, but your finances limit you to lower-priced neighborhoods, be honest with yourself.
6. Choose a neighborhood, then find a Realtor: Some real estate agents are experts on specific neighborhoods and may even know of homes available to buy before they are listed. Also, make sure you are comfortable with your agent.
7. Love a home, but don’t “fall in love” with a house: Make sure your dream home doesn’t become a nightmare. For example, a cute bungalow fixer-upper in East Sac is great, but if you can’t afford the repairs and/or don’t have the home-improvement skills, the house may very well become a money pit – and cause of much stress.