2.27.2002 :: Loans
Top Ten Tips for Prospective Home Buyers
by Janee Del Colletti

Purchasing a new home can bring out many emotions: stress, fear, and EXCITEMENT! If you are considering purchasing a home it is best to take a few steps to be prepared. The following is a list of suggested tips that may help alleviate the negative emotions so you can have fun and focus on the positive ones.

1) Don't buy the car before you buy the garage! Purchases of large ticket items (cars, furniture, appliances, etc.) can greatly affect your purchase power. Keep in mind; every $200/month in debt equals about $20,000 in buying power. So try not to purchase those big items until escrow closes!

2) Get informed! Read articles, books, and columns to help you know what to ask and be prepared.

3) Demonstrate savings ability. Most new homebuyers will experience what is called "payment shock". For example, if you are currently paying $800 month rent and your total housing payment is increasing to $1800 per month (principal, interest, taxes, insurance), you may have a difficult time adjusting to the higher payment. The investors like to see that you will be able to handle the increased expense. This can be evidenced by your ability to save money with your current expenses.

4) Select a mortgage consultant. It is essential to work with professionals you click with in personality and whom you trust and feel confident will meet your personal financial needs. Referrals from friends, family, work associates and real estate agents are an excellent source.

5) Select a real estate agent. Once again, it is very important to work with one agent who you feel you can fully trust and will be working in your best interest. Your mortgage consultant, friends, family, and work associates are wonderful source for recommendations.

6) Review your credit report. You may obtain a copy of your comprehensive credit report from your mortgage consultant or directly from your local credit-reporting agency.

7) Review loan options. There are many loan programs available to buyers other than a straight 30-year fixed rate mortgage. Discuss the various programs (fixed, adjustable, no down, 80/10/10, no point, first time home buyer programs, etc.) with your mortgage consultant to determine what best suits your personal needs.

8) Ask your family for help. Family members can provide a gift for all or part of your down payment.

9) Ask the seller to help. If you are short on cash or reserves it may be an option for you to request that the seller "carry back" a second mortgage or credit your closing costs. Ask your agent and mortgage consultant if this is possible and discuss the details.

10) Get Pre-approved. A PRE-APPROVAL takes that one step further. Your consultant actually presents your financial documents (paystubs, 2 years W-2's, and current bank statements) to an underwriter for loan approval contingent upon receipt of the property information such as the appraisal, purchase contract, and preliminary title report. By doing this you are halfway through the loan process and the seller is more apt to take your offer over someone else who has not taken the step to get approved.

The above are merely suggestions of ways to help you through the home buying process. Good luck and have fun! Finding your home is very exciting and a great accomplishment!

Janee Del Colletti of Santa Cruz Mortgage can be reached at 831.454.1169 or by email at janee@santacruzmortgage.com.