Your initial step should be to speak with a qualified lender about how much you can afford to spend. This one step will save you considerable time by allowing you to preview homes you can confidently afford, rather than pursuing properties outside of your determined price range. Also, you will not be able to write an offer on a home that you love without a pre-approval. If you don’t already have a lender you trust, don’t worry — I can help you out there. I have great lenders in my network that I can get you connected with.

I meet with future homebuyers anywhere from 6-12 months before they’re ready to start the home buying process! There is a lot to learn and I want to set our buyers up for a successful and smooth experience.

Nope! As a buyer, you get your Real Estate Agent’s services at no cost to you. Typically, a seller pays the full commission to both the listing and selling agent.

A contingency is a negotiable provision included in a contract that allows a buyer (or seller) to cancel a purchase agreement; stating that certain events must occur, or certain conditions must be met within a time frame before the contract is valid. By default, a purchase agreements contain buyer contingencies for 𝘪𝘯𝘴𝘱𝘦𝘤𝘵𝘪𝘰𝘯𝘴, 𝘢𝘱𝘱𝘳𝘢𝘪𝘴𝘢𝘭 𝘢𝘯𝘥 𝘭𝘰𝘢𝘯- which can range anywhere from 0-21 days. There are many other contingencies that can be included in a sales contract, but these are the most common three. ⁣

→ 𝗜𝗻𝘀𝗽𝗲𝗰𝘁𝗶𝗼𝗻 𝗰𝗼𝗻𝘁𝗶𝗻𝗴𝗲𝗻𝗰𝘆- allows the buyer to do further investigations on the property such as home, roof + termite inspections, title searches and other documentations. ⁣

→ 𝗔𝗽𝗽𝗿𝗮𝗶𝘀𝗮𝗹 𝗰𝗼𝗻𝘁𝗶𝗻𝗴𝗲𝗻𝗰𝘆- applies to purchases being made with a mortgage loan to determine the property’s market value for financing ⁣

→ 𝗟𝗼𝗮𝗻 𝗰𝗼𝗻𝘁𝗶𝗻𝗴𝗲𝗻𝗰𝘆- if the buyer is unable to receive financing, they have the right to look for alternative sources or to cancel the contract under this contingency ⁣

Generally speaking, a buyer can cancel the contract at any time during their contingency period; if they do, they should receive their full deposit back— In California, there is a process of “active contingency removal.” This means buyers must remove them in writing. In other words, a contingency is not automatically removed, even if the time frame for their removal passes. Once the buyer has removed all of them in writing, they can no longer receive a refund of their deposit should they decide to cancel. ⁣

In competitive markets, some buyers choose to waive contingencies to make their offers more attractive to the sellers. It is always best to consult a reliable real estate agent and lender before waiving any contingencies in a purchase contract.

1. Down Payment: The bulk of the cost of buying a home; a down payment is a percentage of the home’s purchase price that you pay to your loan provider toward the home. Homebuyers typically pay anywhere between 3.5% and 20% for a down payment.

2. Earnest Money Deposit: Once your offer gets accepted, you are required to deposit an “earnest money” into an escrow account within 1-3 business days, which is typically 3% of the purchase price. This deposit goes toward your down payment amount. Earnest money establishes your interest in the home and signals to the sellers that you won’t change your mind at the last minute.

3. Home Inspection Fees: Home inspectors check the quality of the home to make sure it’s safe to live in. They look for things like lead, asbestos, and termites. Home inspections range in cost between $350-$1,400 depending on where your new home is, and what additional inspection you do. If a seller has paid for current inspection reports, you can forgo additional inspections and there won’t be any buyer fees for them.

4. Home Appraisal: Home appraisals are required by your mortgage lender to provide a sound estimate of the market value of the home. An appraisal fee typically costs between $300 and $600, depending on the appraisal company and the size of your property.

5. Closing Costs: Closing costs are the various fees and expenses buyers pay when you purchase a home, 𝘣𝘦𝘺𝘰𝘯𝘥 𝘵𝘩𝘦 𝘥𝘰𝘸𝘯 𝘱𝘢𝘺𝘮𝘦𝘯𝘵 that cover legal, loan, insurance, and other home costs. Closing costs can accrue from lenders and third parties that are involved in your loan transaction such as escrow and title companies— 𝗛𝗼𝗺𝗲 𝗯𝘂𝘆𝗲𝗿𝘀 𝗰𝗮𝗻 𝘁𝘆𝗽𝗶𝗰𝗮𝗹𝗹𝘆 𝗲𝘅𝗽𝗲𝗰𝘁 𝘁𝗼 𝗽𝗮𝘆 𝗰𝗹𝗼𝘀𝗶𝗻𝗴 𝗰𝗼𝘀𝘁𝘀 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝟭-𝟯% 𝗼𝗳 𝘁𝗵𝗲𝗶𝗿 𝗵𝗼𝗺𝗲’𝘀 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝗽𝗿𝗶𝗰𝗲; depending on price, discount points, transfer taxes and other factors. ⁣We recommend saving an additional $7K - $15K for closing costs.

What makes up your closing costs?

◦ Loan fees – Loan fees, or lender fees, are the expenses accrued when securing a mortgage loan. The mortgage payment is paid to your mortgage lender and can include:

⇾ Loan application fees

⇾ Credit report fee during your loan application process

⇾ Lender-based origination which pays the lender for the creation of the loan

⇾ Document preparation fee for purchasing of the home

⇾ Underwriting fees for the loan

⇾ Upfront interest on the loan

◦ Title taxes – When you purchase a home, you need to change the name on the deed from the seller’s name to yours. This is called a title change. In order to do this, you have to pay a deed tax (sometimes known as a stamp duty).

◦ Title fees – In order to change the title of the home, your lending company will conduct a title search to ensure that the seller rightfully owns the home (to prevent ownership issues down the line). Then, there are additional costs for title settlement, title insurance binder, and title insurance. Title insurance protects you from financial loss if the ownership of your new home ever comes under question.

◦ Escrow fees – As you are finalizing the home’s sale, you will typically put your down payment and earnest money into escrow. In order to use escrow, you are required to pay a fee that will cover the cost of an escrow agent or the attorney who maintains and manages the transaction.

Depending on the location and deal you make with the seller, sometimes the seller will pay these fees, sometimes the homebuyer.

◦ Homeowners insurance – Many lenders require you to buy homeowner’s insurance as a condition of your loan. Typically, three months of homeowners insurance must be paid as a part of closing costs.

◦ Notary fees – To verify the signed documents that go into closing on a house, you’ll need to pay for a notary to officiate your signatures.

◦ Prepaid property taxes – When you buy a home, you are expected to pre-pay six months of property taxes to your lender at closing when acquiring an impound account. The lender will then pay the taxes on your behalf each month. Typically, this is meant to ease the final amount of your property tax bill when it comes due.

◦ HOA fees – If you are purchasing a condo or a home in a gated community, you may have Home Owners Association Fees to pay. These fees can cover anything from landscaping community areas to maintaining shared pools.

⁣6. Emergency Fund: Whether you’re buying an apartment in an urban center or an updated farmhouse out in the country, every new homeowner should have an emergency fund. The costs of buying a house can be draining, but having a fund set aside for miscellaneous fees or in case you need an emergency fix can provide some much-needed cushioning in your finances.

No. This is a myth! Different loans require different down payments—some as low as 0%— so you’ve got options!

20 percent: If you can swing it, putting 20% down has its benefits like lower payments, more equity, and no PMI.

10 percent: For an FHA loan, you’ll need 10% and a credit score of 500 to 579.

3.5 percent: If your score is a little higher (580+), 3.5% will do for an FHA loan.

3 percent: A conventional loan owned by Fannie Mae or Freddie Mac requires as little as 3% down.

0 percent: Qualify for a VA loan or a USDA loan? That’ll be zero dollars down, please. High-five!

Private mortgage insurance (𝘢𝘭𝘴𝘰 𝘤𝘢𝘭𝘭𝘦𝘥 𝘗𝘔𝘐), is a 𝗺𝗼𝗻𝘁𝗵𝗹𝘆 𝗽𝗿𝗲𝗺𝗶𝘂𝗺 𝗮𝗱𝗱𝗲𝗱 𝘁𝗼 𝘆𝗼𝘂𝗿 𝗺𝗼𝗿𝘁𝗴𝗮𝗴𝗲 𝗽𝗮𝘆𝗺𝗲𝗻𝘁, 𝘁𝗵𝗮𝘁 𝗶𝘀 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱 𝘄𝗵𝗲𝗻 𝘆𝗼𝘂’𝗿𝗲 𝗽𝘂𝘁𝘁𝗶𝗻𝗴 𝗹𝗲𝘀𝘀 𝘁𝗵𝗮𝗻 𝟮𝟬% 𝗱𝗼𝘄𝗻 𝗼𝗳 𝘁𝗵𝗲 𝗵𝗼𝗺𝗲’𝘀 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲 𝗽𝗿𝗶𝗰𝗲. PMI protects your lender if you stop making monthly mortgage payments. A smaller down payment (less than 20%) means the lender takes on more risk because they’re getting less money upfront. Mortgage insurance covers that extra loss margin for the lender; if you ever default on your loan, it’s the lender that will receive a mortgage insurance check to cover its losses.⁣

𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝗶𝘀 𝗣𝗠𝗜?⁣

Mortgage insurance is typically calculated as a percentage of the loan amount. The average cost of PMI for a conventional home loan varies by loan program, but in general, mortgage insurance is about 𝟬.𝟱-𝟭.𝟱% 𝗼𝗳 𝘁𝗵𝗲 𝗹𝗼𝗮𝗻 𝗮𝗺𝗼𝘂𝗻𝘁 𝗽𝗲𝗿 𝘆𝗲𝗮𝗿— 𝘠𝘰𝘶 𝘸𝘪𝘭𝘭 𝘨𝘦𝘵 𝘢 𝘓𝘰𝘢𝘯 𝘌𝘴𝘵𝘪𝘮𝘢𝘵𝘦 𝘸𝘩𝘦𝘯 𝘺𝘰𝘶 𝘢𝘱𝘱𝘭𝘺 𝘧𝘰𝘳 𝘢 𝘮𝘰𝘳𝘵𝘨𝘢𝘨𝘦; 𝘵𝘩𝘦 𝘱𝘳𝘦𝘮𝘪𝘶𝘮 𝘪𝘴 𝘴𝘩𝘰𝘸𝘯 𝘰𝘯 𝘺𝘰𝘶𝘳 𝘓𝘰𝘢𝘯 𝘌𝘴𝘵𝘪𝘮𝘢𝘵𝘦 𝘢𝘯𝘥 𝘊𝘭𝘰𝘴𝘪𝘯𝘨 𝘋𝘪𝘴𝘤𝘭𝘰𝘴𝘶𝘳𝘦. ⁣

𝗙𝗛𝗔 𝗺𝗼𝗿𝘁𝗴𝗮𝗴𝗲 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗿𝗮𝘁𝗲𝘀 are pre-set & required regardless of down payment amount. 𝘕𝘖𝘛𝘌: With an FHA loan, PMI lasts for the life of the loan if your down payment is less than 10%. ⁣

𝗖𝗼𝗻𝘃𝗲𝗻𝘁𝗶𝗼𝗻𝗮𝗹 𝗣𝗠𝗜 is calculated based on the loan amount, the size of the down payment, and the borrower's credit score; and is canceled after your equity, or loan-to-value, reaches 78% of the purchase price. Borrowers with low credit scores, high debt-to-income, and smaller down payments will typically pay higher mortgage insurance rates. Improving your credit score, paying down debt and putting down as much as you can afford may reduce your PMI costs.⁣

𝗬𝗼𝘂 𝗰𝗮𝗻 𝗱𝗿𝗼𝗽 𝗣𝗠𝗜 𝘄𝗵𝗲𝗻:⁣

✓ You achieve 80% LTV by paying down your loan or getting a higher appraised value.⁣

✓ You pass the halfway point of your mortgage term.⁣

✓ You refinance & the new loan balance is less than 80% of the home's value.