Home Buying Tips

A home is one of the largest purchases that you will make in your lifetime. Buying a home is a complex process with many elements, steps, and considerations. There are also plenty of things to watch out for or avoid. Click the tips below to learn more about buying a home and items to beware of, to make your home buying a better experience.

• Things to do to prepare to buy a home in the future.

• Ensure that you are personally and financially ready to buy a home.

• Work with a knowledgeable, experienced, and caring real estate agent.

• Work with a knowledgeable, experienced, and caring home loan officer.

• Study the real estate market and determine the right time to buy a home.

• Understand the home buying process.

• Buy the right home with the right loan at the right time.

• Check your credit report at least once per year for accuracy.

• Shop for a home loan before looking for a home.

• Get approved for a home loan before shopping for a home.

• Visit at least several homes and areas before you decide to buy a particular home.

• Think through and define the characteristics that will make you happy in your next home.

• Visit a neighborhood on different days and times.

• To enhance getting your offer being accepted, submit a complete offer.

• Familiarize yourself with the purchase agreement and related documents.

• Understand the home buying costs.

• If possible, visit a home after a rainstorm and look for signs of leaks.

• Things to watch out for when inspecting a home.

• Have the seller pay for any necessary termite-related repairs.

• Have the seller pay for a comprehensive home warranty.

• Obtain a home inspection and other necessary inspections.

• Get a home inspection from a home inspector who is very thorough and diligent.

• Get a heating furnace inspection and tune-up.

• Request that seller repair health and safety or significant issues.

• Get several competitive homeowner's insurance quotes with adequate coverage.

• Do not remove contractual contingencies in writing until you are ready.

• Ensure that the way in which you hold title to your property is best for you.

• After buying a used home, have a locksmith re-key all the locks.

• After buying a used home, have a plumber clean all the drains.

• If a home was built prior to 1978, it may have lead-based paint.

• Create a living trust to avoid probate.

• Save all receipts for all home improvements to your real property.

• Re-evaluate your automobile insurance when you move after buying a home.

• Things to consider when buying an attached condominium home.

• Consider buying a home built after 1995.

• Consider whether a home is located in an area with a higher risk of wildfire.

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What should you do to prepare to buy a home in the future? If you plan on buying a home in the future, there are a several key things you should do to prepare yourself:

1. Save money or allocate money for the down payment.
• The amount of money you will need for the down payment on a home varies.
• If you are a veteran who serviced in the military, you may be able to qualify for a Veterans Administration (VA) home loan with as little as zero down payment.
• A low down payment option is a Federal Housing Administration (FHA) home loan which requires as little as 3.5% down payment.
• There are other home loan programs that require 5% or 10% or 15% or 20% down payment.
• A conventional home loan requires 20% down payment and usually has a lower interest rate for borrowers with a high credit score.
2. Maintain your credit report or improve your credit score.
• Order a free copy of your credit report. The largest credit reporting agencies in America — Experian, Transunion, and Equifax — have collaborated to provide a Web site from which you can obtain a free copy of your credit report from each of them. Click the link above and follow the on-screen instructions to obtain a free copy of your credit report from each of these companies for a total of three credit report.
• Check each of the three credit reports for accuracy. If you find any inaccuracies, follow the instructions on the respective credit report to notify the credit reporting company to correct the information.
• If you have any past due bills or collections on your credit report, you should contact the companies that you owe money to and make a deal to pay the past due bill if they will remove the record from your credit report. If you cannot afford to pay the full amount due, get on a payment plan to pay them over a period of time.
• Be sure to pay any credit card bills or other loans consistently on time.
3. Review your lease agreement if you are currently renting a home.
• If you are currently renting a home and are in a long-term lease, review the lease and note the lease expiration.
• Also note the monetary penalty for terminating the lease before the expiration date.
• Ideally, you want to buy your home toward the end of your lease term, to avoid an early termination penalty.
• If you are on a month-to-month lease, then you simply need to give the property owner a 30-day notice prior to vacating.
4. Determine when you will be personally and professionally ready to buy a home.
• Your source of income should be stable.
• Your income should be consistent.
• You have money saved to cover emergencies and unexpected expenditures.
• You have enough money saved to cover your future housing payments for several months.

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Before proceeding to buy a home, you should ensure that you are personally and financially ready to buy a home. If you are ready to buy home, you should be able to say the following:

• The house I can afford meets my expectations.
• I am better off buying than renting.
• I understand the cost of homeownership.
• I have good credit.
• I am financially stable.

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Real estate is a complex field, buying a home is a complicated process, and a home is a very large purchase, therefore it is important to work with a knowledgeable, experienced real estate professional who cares about you and your goals. Try to find the best real estate agent and work closely with him.

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If you will be financing your home purchase, it is important to find and work with a knowledgeable, experienced home loan professional who cares about you and your goals. He should be solution-oriented and service-oriented. Try to find the best loan officer and work closely with him so he can get you the right loan program with competitive interest rate and loan fees.

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It is very important to study the real estate market and consult with a real estate advisor to determine the right time to buy a home. Timing is critical. Buying a home at the wrong time can cause you to overpay for a home and jeopardize your financial situation.

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It is very helpful to understand the home buying process.

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A home is one of the largest purchases you will make in your life. You need to ensure that you:

1. Buy the right home for you.

   The home should have the characteristics that will enable you to enjoy it and make you happy.

2. Get the right home loan.

   Learn about the various types of home loans and be sure to get the right loan for you. Do your best to get a competitive interest rate and closing costs.

3. Buy at the right time.

   You should shop for a good deal and strive to buy a home when prices are favorable and homes are not overpriced.

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Having a high credit score can help you qualify for lower interest rates when obtaining a home or automobile loan. It is a good idea to check your credit report at least once per year for accuracy. The largest credit reporting agencies in America — Experian, Transunion, and Equifax — have collaborated to provide a Web site from which you can obtain a free copy of your credit report from each of them. Click the link below and follow the on-screen instructions to obtain a free copy of your credit report from each of these companies.

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It is important to consult with different lenders and shop for the right loan—before looking for the right home, and definitely before you submit an offer or before your offer gets accepted.

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It is very important to consult with a competent lender and get pre-approved for a home loan before shopping for a home. A loan pre-approval gives you several benefits:

• A home loan pre-approval will determine the highest amount for which you qualify.
• Your loan pre-approval amount can be used to only consider homes within your financial qualifications.
• A home loan pre-approval is necessary when placing an offer on a home, to demonstrate your capacity to buy the home.

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It is a good idea to visit at least several homes and areas before you decide to buy a particular home. This will help you refine your home criteria as well as give a basis for comparison, which will help you ensure that the home you decide to buy is the right home for you.

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Think about your next home and define the characteristics that will make you happy. Visit some homes or view homes online to get ideas. Define the characteristics that you must have in your next home as well as those characteristics that you would like to have. Below are some considerations.

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Before deciding to place an offer on a home, visit the neighborhood on different days and times to gauge the traffic, neighbors, and other factors. You should also speak with some of the neighbors.

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To enhance getting your offer being accepted, submit a complete offer containing the purchase agreement and related documents, an underwriting loan approval or pre-approval letter from a funding lender, your most recent bank statement(s), a minimum of 1% of the purchase price as earnest money deposit, a recent credit report with your credit scores, and possibly a personal letter from you to the seller.

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It is very helpful to familiarize yourself with the purchase agreement and related documents. Your real estate advisor can explain these documents to you.

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It is very important to understand the home buying costs.

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It is a prudent idea to visit a home after a rainstorm and look for signs of leaks.

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Below are some of the many things to look for when inspecting a home. Be sure to get a thorough home inspection from a professional home inspector.

Look For	Description
Road Noise	Observe if there are road noise and excess pollution from a nearby major road. I do not recommend buying a home very close to a major road that has significant road noise, because the home will be more difficult to sell in the future and will sell for less.
Natural Hazards	Research for potential natural hazards such as wildfires, earthquake fault line, flood zone, soil movement, radon, and other potential negative factors. Negotiate with the seller to provide a natural hazard report indicating whether the property is subject to any of these potential natural hazards.
Cracks in Driveway, Garage Floor, or Sidewalks	Carefully look at the driveway, garage floor, and sidewalks for unevenness or cracks.
Deteriorated or Damaged Fencing	Look at the fence around a property for evidence of deterioration or damage.
Deteriorated Wood Fascia	Look at the wood fascia or trim around the roof for signs of deterioration.
Cracks in Stucco	Look for large cracks on the stucco around a home.
Cracks in Ceiling, Walls, or at Door Casings	Carefully look at the ceiling, walls, and door casings for cracks or separations which may indicate that the structure has shifted or has sustained damage possibly due to earth movement or foundation problems. Doors that do not close or gaps between doors and their casings may also indicate similar problems.
Cracks in Foundation	Carefully look at all the floors for unevenness or cracks. Cracked tiles may indicate a crack in the underlying cement foundation. I do not recommend buying a home with foundation problems.
Uneven Floors	Carefully look at all the floors to determine if they are even or if there are spots that are uneven. If the floor does not have carpeting, place a marble in the middle of the floor and see if it rolls instead of staying stationery.
Stains on Ceiling or Attic	Be sure to look for signs of leaks, such as stains on the ceiling or attic. Ask your home inspector to confirm whether there are any water stains on the wood in the attic. Have him take photographs of the attic areas and show them to you
Leaks Beneath Sinks	Look beneath all sinks for water stains or leaks.
“Cottage Cheese” Ceilings and Asbestos Hazards	Homes built from 1920 to 1972 may contain asbestos. Asbestos that has been sprayed on ceilings often has a spongy, “cottage cheese” appearance with irregular soft surfaces. A Certified Asbestos Consultant can be hired to determine whether or not asbestos is present and to give advice about how to take care of it safely. Residential-Environmental-Hazards
Lead-Based Paint Hazard	Many houses and apartments built before 1978 have paint that contains lead. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. To inspect your home for lead hazards, hire an individual or contractor who has been certified by the California Department of Health Services (CDHS). A CDHS-certified Inspector/Assessor will determine the lead content of every painted surface in your home and identify any sources of serious lead exposure (such as peeling paint and lead dust). To permanently remove lead hazards, you should hire a lead abatement contractor. Abatement methods include removing, sealing or enclosing lead-based paint with special materials. Simply painting over lead-based paint with regular paint is not enough. Hire an individual or contractor who has been certified by the CDHS. CDHS-certified individuals have the proper training to do this work safely. They have the proper equipment to clean up thoroughly. Residential-Environmental-Hazards
Mustiness or Moisture	Carefully smell the home for signs of mustiness or moisture, this may indicate mold problems. Mold is a health hazard. I do not recommend buying a home with mold issues.
Ground in Contact with Stucco	There should be a distance of several inches between the soil or cement patio and the bottom of the stucco of the exterior of the structure, so that water or moisture does not permeate into the wall and inside the home.
Improper Grading	The ground around a home should be graded slightly or gently sloped so that rain water naturally flows away from the structure to the perimeter of the property.
Tree Roots	Observe if there are large tree roots in the yard that may be burrowing into drainage pipes and may potentially clog them and cause a sewage backup.
Old Equipment	Watch out for old equipment such as a very old furnace, hot water heater, air conditioner, or kitchen appliances. These may likely need to be replaced once you buy the home, and therefore will be an additional significant expense. You may try to negotiate with the seller for him to provide an monetary concession or credit to compensate for the condition of such equipment.
Old Single-Pane Windows and Doors	Observe if the home has old single-pane windows and doors. The cost to upgrade the windows and doors to dual-pane vinyl windows is significant.
Non-permitted Additions or Modifications	Check if the home has room additions or other modifications that were done without the appropriate legal building permits.
Rodents or Reptiles in Electrical Panel	Check if the home has rodents or reptiles in the electrical panel. These can cause safety problems.
Rodents in the Attic	Check if the home has rodents in the attic. If so, the rodents should be eradicated by a pest control company.
Termite Damage	Be sure to get a termite inspection report and look for termite-related damage to the wood fascia, eaves, patio cover, fences, and other wood structures.
Defective Heater Furnace	Particular models of horizontal furnaces manufactured by Premier Furnace Company and Consolidated Industries (formerly Premier Furnace Company) were part of an extensive Consumer Products Safety Commission recall. Defective Premier Furnace Company furnaces were sold under trade names such as Premier, Sunburst, Sun Glow, P.F.C., Carrier, and Sunbelt, and include models HAC, HCC, and HBA manufactured between 1983 and 1994. If a home has a furnace manufactured by Premier Furnace Company or Consolidated Industries, you should have the furnace evaluated by a HVAC (heating, ventilating, and air conditioning) company to determine if it is defective. If the furnace is defective, negotiate with the seller to have the furnace replaced at the seller’s expense. Consumer Product Safety Commission Warns About Defective Furnaces in California Consumer Product Safety Commission Recall of Furnaces Hazards of the Consolidated Industries Horizontal Furnace Recalled Furnaces Starting Fires Thousands of Furnaces Recalled
Polybutylene Piping	Polybutylene is a form of plastic resin that was used extensively in the manufacture of water supply piping from 1978 until 1995. Polybutylene piping was used as a substitute for traditional copper piping. Polybutylene piping can be defective and cause water damage to a home. Learn More
Electrical Hazards	Check if the home has any electrical hazards such as exposed electrical wires, unprotected electrical cords, faulty switches, uncovered wall outlets, and so on.

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During the offering process, negotiate for the seller to pay for any potential termite-related repairs (known as Section 1 termite work).

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Have the seller pay for a one-year comprehensive home warranty with coverages for the major systems of the home, including the roof, furnace, air conditioner, building code upgrades, and refrigerator.

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It is essential to obtain a home inspection of the home that you are thinking of buying. Additionally, you may obtain other inspections that may be necessary, such as a termite and pest inspection, roof inspection, plumbing inspection, mold inspection, soil inspection, geological inspection, radon inspection, pool inspection, and so on.

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You should hire a highly competent home inspector or home inspection company to perform a home inspection of the home you intend to purchase. The home inspector should provide good service and explain to you the results of his inspection. He should also provide you a comprehensive written report with color photographs of defects. These defects can be used to negotiate repairs or a monetary concessions from the seller during the escrow process.

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When you buy a used home, it is a good idea to have the heating furnace inspected and tuned up to ensure that it is working properly. A local company, ASI Hastings Heating and Air Conditioning, will perform this service for $87. If you have the heating furnace inspected and serviced before you buy the home, and if any defects are discovered with the furnace, you can request that the seller repair the furnace or provide you a monetary concession or credit for the repair.

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Based on the findings by the home inspector during the home inspection process and your review of the home inspection report, work with your real estate advisor to request that the seller repair health and safety or significant issues or problems.

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During the home buying process, you should shop around and get several competitive homeowner’s insurance quotes with adequate coverage. For tips on obtaining adequate insurance coverage for your home, see the home insurance coverage checklist.

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A typical purchase agreement has an inspection contingency period of 17 days and a loan contingency period of 17 days, both from the date that the agreement is signed by both the seller and the buyer. (The contingency period for inspections and financing are negotiable and can be extended during the escrow process.) Both the inspection contingency and the loan contingency serve as safeguards for the buyer. You should not remove either or both contractual contingencies in writing until you are sure you want to proceed with the purchase of the home and are confident that you will be able to secure your home loan. If you remove both contingencies in writing and then cannot or will not complete the transaction, your earnest money deposit will be forfeited and retained by the seller.

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Check to ensure that the way in which you hold title is best for you. If you are married, you may want to ensure that both spouses hold title to your home.

If you want to change how you hold title to your property, contact the escrow company that handled your home purchase and ask them for the appropriate form and instructions.

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Immediately after you buy a home, I highly recommend that you have all locks on external doors re-keyed for security. Re-keying is less expensive than replacing the existing locks on the doors and preserves the esthetics of the door handles. A local locksmith can re-key the locks to your home for a nominal fee, and he can also re-key the locks so that one key fits all locks.

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Whenever you buy a used home, it's a good idea to hire a plumber to thoroughly clean every drain within the home using a wire "snake." This includes "snaking" all sinks, bathtubs, showers, and toilets. This thorough cleaning should remove any accumulated material within the plumbing pipes, help prevent or minimize future blockages, and reduce your home ownership costs — and therefore make owning your new home more enjoyable.

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Many houses and apartments built before 1978 have paint that contains high levels of lead, which is referred to as lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women.

Children exposed to lead may develop lead poisoning, which may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory.

If the home was built prior to 1978, take special care when materials or surfaces painted with lead-based paint are disturbed.

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Probate is the administration of the estate of a deceased person. It is a Superior Court proceeding to settle the affairs (assets, debts, and other matters) of a deceased person.

The probate process can take considerable time and money. It also makes information public. To avoid probate altogether, you can create a revocable living trust via an attorney.

A living trust is a way of holding title to real property and other assets. It offers you more flexibility in estate planning, keeps your assets confidential, avoids probate of assets in the trust, and may help to preserve an estate.

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The tax basis for a real property is the sum of the purchase price, acquisition costs, and improvements to the property. Knowing the tax basis is important because it is used when calculating gain or loss on the sale of the property, as well as for calculating the depreciation tax deduction for an investment property.

When you sell your property, the higher your tax basis, the lower the amount of potentially taxable capital gain. Therefore, be sure to save all receipts for improvements that you make to your real property, so you can increase your tax basis for the property and thereby reduce your potential capital gain tax liability.

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If you buy a home in an area with a lower crime rate, you may be able to reduce the premium amount for your automobile insurance. Once you move into your new home, contact your automobile insurance company and ask them to re-evaluate your automobile insurance policy based on your new address and zip code to determine if the insurance premium should be reduced.

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A typical attached condominium home (condo) is a home or unit within a building or complex of buildings. When you buy a condominium home, you own the exclusive right to occupy and use the interior of the home and the right to jointly use the common facilities within the condominium complex with other home owners. You jointly own the exterior property and common areas with other homeowners within the complex. You pay a homeowner fee to a homeowner association which uses the funds for general repairs and maintenance to the common structures and areas, and saves some money as cash reserves for future repairs. The homeowner association defines rules and regulations that govern the residents within the building complex. Below are some important considerations when buying an attached condominium home.

• Condition of Home: What is the overall condition of the condominium home? Is it acceptable to you?
• Location of Home: Is the condominium home that you seek to buy located in an undesirable area of the complex? Is there road noise and pollution? Is the home located near the swimming pool, which may make it more susceptible to noise from persons who use the pool facility? Do the windows within the home face directly into the windows of nearby homes? Is the home located next to the garbage dumpster?
• Condition of Condominium Complex: What is the overall condition of the condominium complex? Are the landscaping, sidewalks, swimming pool, pavement, exterior of buildings, roofs of buildings, and other common areas in well-maintained condition?
• Complex Facilities: Confirm what common facilities are available for home owners. These may include a business center, swimming pool, spa, clubhouse, recreational room, tennis court, basketball court, racquetball court, gym, and so on.
• Density of Complex: How densely packed are the buildings within the condominium complex? Is that acceptable to you?
• Homeowner Association: Obtain the contact information of the homeowner association for the condominium complex. The homeowner association board of directors consist of elected home owners who control the budget and rules of the condominium complex.
• Management Company: Obtain the contact information of the management company that manages the condominium complex. The management company manages the condominium complex according to the instructions of the board of directors of the homeowner association.
• Homeowner Association Documents: Obtain a copy of the homeowner association documents for the condominium complex and carefully review them. You may also obtain a copy of the notes or minutes from past board of directors meetings, which may provide information about potential issues or problems within the condominium complex.
• Homeowner Dues: Confirm the amount of the monthly homeowner dues (homeowner association fees) and what they provide you. Research what is included in the condominium fee. Ask the management company or a member of the homeowner association if the condominium dues are scheduled to increase.
• Special Assessments: To pay for unforeseen or unexpected large repairs, homeowner associations may charge home owners a special assessment. Inquire whether the condominium association has or will charge home owners a special assessment and the cost of the assessment to each home owner.
• Issues or Complaints: Review the notes or minutes from recent condominium association board meetings to determine if there are adverse issues or complaints within the condominium complex. Speak to current owners to gauge the effectiveness and responsiveness of the condominium association.
• Rules or Regulations: Review the rules and regulations which are known as CC&Rs (Covenants, Conditions, and Restrictions) that govern the residents within the condominium complex. Are the rules acceptable to you? Are you able and willing to comply with them?
• Financial Solvency: Research the financial solvency of the condominium association by reviewing the condominium association’s budget and monetary reserves.
• Litigation: Is the condominium association involved in a lawsuit? If so, this may lead to a rise in homeowner dues to pay for the legal costs and a potentially negative outcome. Is there litigation between the homeowner association and the builder involving building defects? If so, determine whether the building defects affect the condominium home that you seek to buy. Some lenders will not fund a home loan on a condominium home, if its condominium association is involved in litigation.
• Percent Owner Occupancy: Research the percentage of home owners who reside within the condominium complex. A low owner occupancy percentage is undesirable. Some lenders require more than 51% owner occupancy for some home loans.
• Delinquent Homeowners: Research the percentage of homeowners within the condominium complex who are delinquent on their monthly dues. A high percentage of homeowners who are delinquent on their dues may cause the homeowner association to be underfunded, which will prevent it from properly maintaining the condominium complex.
• Homeowners in Default: Research the number of homeowners who are in default on their mortgage. Also research the number of homes for sale within the complex that are financially distressed (bank-owned foreclosures and short sales). A large number of financially distressed homes for sale within a condominium complex may cause home prices within the complex to decline.
• Home Insurance: When you are researching for home insurance for a condominium home, ask your insurance carrier for a condo owner’s insurance policy. This will typically cover from the interior walls of the home inward: interior walls, flooring, lighting, fixtures, cabinets, appliances, personal property, and so on.
• Condominium Association Insurance: Review the condominium association’s insurance policy to determine what is covered and that it is in force.
• Building Maintenance: Confirm what portion of the building and areas the homeowner association is responsible for maintaining and what each homeowner is responsible for maintaining. Is the homeowner association responsible for termite-related repairs?
• Garage: Does the condominium home include a garage? If so, what is the capacity of the garage.
• Parking: Confirm if there are assigned or reserved parking spaces that are included with the condominium home. How adequate is the guest parking?
• Storage: Does the condominium home include a storage space?

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When you are buying a home, consider buying a home built after 1995, for the following reasons:

• Homes built from 1920 to 1972 may contain “cottage cheese” ceilings containing asbestos, which is a health hazard.
• Some homes built prior to 1978 may have lead-based paint, which is a health hazard if ingested by children.
• Homes built before about 1992 have single-pane windows instead of the better-insulating double-pane windows.
• Some homes built between 1983 and 1994 have horizontal defective furnaces that are a health and fire hazard.
• Some homes built between 1978 and 1995 used polybutylene water piping, which can be defective and cause water damage to a home.
• Newer homes tend to have GFI-protected electrical outlets in the kitchen and bathrooms.
• Newer homes tend to have more open floor plans, higher ceilings, more or larger windows, larger master bedrooms, more spacious master bathrooms, and a laundry room within the home.
• Some newer homes have fire water sprinklers installed within the ceilings.
• Some newer homes are more fire-retardant, because they have roof vents that are flush with the roof instead of protruding upward enabling fire embers to more easily enter the attic of a home and start a fire, or they may not have wood members at the perimeter of the roof which can burn in a wildfire situation.
• Newer homes tend to be more energy efficient and reduce your energy costs.
• Newer homes tend to be built to comply with higher health and safety standards.

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When you are buying a home, consider whether the home is located in an area with a higher risk of wildfire. Is the home located near a hill, canyon, or open space with a large amount of vegetation that could fuel a wildfire and endanger you and your home? Are there multiple roads that could be used as escape or evacuation routes in the event of a wildfire?