Quick Start Guide
First-Time Home Buyers Start Here
1. Choose a Realtor
Choosing a Realtor is one of the most important steps in the buying process. Your Realtor will help you search for homes, show you available homes, write up offers, and work with you through the escrow process. When you see a home you like, your Realtor will get you more information and set up an appointment to view the property, no need for you to contact any listing agents. Most times, it is best to choose a Realtor to represent you, rather than go through the listing agent who already represents the seller. On occasion, it could be beneficial to use the listing agent. For example, if you are interested in a Measure J listing, it might not make sense to seek out your own Realtor who may have no experience with affordable housing.
2. Choose a Lender
There is no one-size-fits-all lender. A lender is a bank/credit union (Wells Fargo, Bank of America, Bay Federal, etc.) or a mortgage broker (Santa Cruz Home Finance, RPM mortgage, etc.) Your lender will depend on the type of loan that best suits your situation. Lenders do not have access to all loan programs. A competent Realtor will help you choose a lender that fits your needs. I currently refer clients to different lenders depending on their situation, credit score, location of property, and down payment.
3. Get Pre-Qualified
You will set up an appointment with your lender. They will ask you to bring in 2 years of tax returns, recent paystubs, recent bank statements, etc. They will run your credit report. Then, they will be able to show you your maximum purchase price, estimated monthly payments, and estimated closing costs. They can show you these payments based on several different prices as most people don't wish to go up to their absolute maximum price. The lender will write you a pre-qualification (pre-qual) letter or a more formal pre-approval letter. This letter must accompany your offer.
4. Set Up an automated MLS search
Now that you know how much you can spend on a home, set up an automated search to find homes that meet your minimum criteria and price range. Most Realtors have automated search capabilities on their websites. Feel free to use our site for your search. You want a search that will email you at least once a day when new properties hit the market or if there is a price decrease. When you see a home that you like, let your Realtor get you more information. Remember, you don't need to call listing agents who represent the seller, your Realtor will do the work for you.
5. View Properties with your Realtor
Your Realtor will set up appointments to view available properties and will accompany you on the showings. If a property looks good, your Realtor will get more info from the listing agent and make sure the property is still available.
6. Write an Offer
Your Realtor will go over the purchase contract with you and assist you in writing an offer. The offer, along with the pre-qual letter, will be submitted to the seller. The seller typically has 3 days to respond to the offer. Usually they will respond with some form of counter offer. Once both parties agree and sign the offer and any counter offers, you have a binding contract and you enter the escrow process. Typically you have 3 business days to bring your initial deposit to the title company.
Once the Offer is Accepted...
7. Inspection Period
Typically you have around 17 days to inspect the property, although, the timeframe is negotiable. It is a good idea to order a home inspection, termite inspection, and any other inspection you deem necessary as soon as possible in this time period. Remember, you made your offer based on the as-is condition of the property. If the property obviously needs some work, you should take that into consideration with your original offer. However, should any unforeseen issues come up during the inspection period you have the following options:
- Go ahead with the transaction and take care of the repairs yourself after you close escrow.
- Back out of the deal and receive your full deposit back.
- Ask the seller to make repairs or credit you some money (usually up to a maximum of 3% of the purchase price. Usually you can only use this credit to cover your closing costs, but not the actual repairs.)
- Ask the seller to lower the price.
8. Remove Contingencies
Once you approve of all the reports, the seller's disclosures, the appraisal, and the lender tells you that the loan will be approved, you can remove your contingencies. Once you remove these, the seller can come after your deposit if you decide not to go through with the purchase. Therefore, it is very important that you and your Realtor take this step seriously.
9. Sign Off
Once the lender fully approves your loan, they will send loan documents to the title company. You will make an appointment (typically 30-45 minutes) and sign the loan documents at the title company. The title company will also tell you how much money they need from you to close the deal. This amount will be your down payment + closing costs - any seller credits - deposit already paid. This amount is usually paid by bank wire or cashiers check.
10. Close Escrow and Get Keys!
One or two days after you sign off, your lender will fund the loan (wire the amount of your mortgage to the title company who will give it to the seller). Your lender will make a last-minute phone call to your employer to verify that you are still employed on the day they fund the loan and usually run one last credit check. Once the tile company receives the funding from the lender, they will record with the county the following morning and escrow will be officially closed. At this point you are the official new owner! Unless you specified something different in the contract, your Realtor will give you keys at this time and you can start moving in! Your Realtor can assist you in changing your utilities and with any issues that arise at this time.