Tips For Buyers
95% of first time home buyers and 86% of repeat buyers finance
their home purchase so my comments have to do with financing.
1. Make sure your credit is in shape. You can obtain a free
annual credit report from www.annualcreditreport.com
Actually there are three major credit reporting companies so you can get three
reports a year by obtaining reports from different companies at different times.
Pay off the small accounts and don't use them. You can raise your score by
reducing the number of accounts with balances. Of course you do want to make
sure that you are using 3 different accounts that show current ratings.
2. Start to gather and manage the documents that you will need
for your loan. You will need the last two years Federal Bank statements plus
w-2's, 2 most recent consecutive pay stubs, 2 most recent consecutive bank
statements to prove the down payment.
3. Get pre-approved. There are probably thousands of loan rules
these days and it is a good idea to sit down with a competent loan officer and
discuss your loan application.
4. Don't be surprised with unexpected real estate costs. Get a
break down of the fees that will be associated with your purchase. Counties have
traditions. In Santa Clara County it is tradition that the seller pays for the
escrow, title, etc and one county away in San Mateo it is customary that the
buyer pays these fees. Get a break down of the costs early so that there are no
5. Consider a Home Warranty. This is a policy that pays for
repairs to appliances, etc during the first 12 months of ownership. I bought a
home once and the Home Warranty was $400 but we had a major problem and the
damage came to just over $5,000 -- this is a good investment.
6. Talk to your accountant or tax-preparer and discuss if you
should adjust your withholdings. If you have never owned a home before you do
get a tax exemption and you may be able to claim more dependants during the year
so that your actual pay check increases and you will still be even at the end of
7. If you are in California you do want to consider a living
Trust. This can save you thousands of dollars in the event of an untimely
8. Consider a life insurance policy to cover the mortgage. For
most a term life policy is inexpensive - especially those who are still
This is the largest purchase for most of us -- protect the asset
with good financial planning and decisions.