Buying a home for the first time is a milestone marker and one of the most exciting events that will happen in your life. If you’re considering buying a home in the Palm Springs, CA area, you’ll definitely want to check out our comprehensive Buyers Guide and home buying tips to give you the advantage you need and help you get started.
Making the Decision to Buy
You already know that buying your first home is a really big decision and it’s also an exciting one. The decision to buy, however, is a lot easier than the actual process of buying itself. And if you don’t know what you’re doing, your money and your peace of mind could be at risk. It’s also important to make sure you’re completely ready for it. Here are a few questions to ask yourself:
- Are you better off buying or renting?
Deciding on whether to rent or buy always comes down to what you can afford. A good rule of thumb is to make sure your mortgage payment is 25% or less of your monthly take-home income. This leaves plenty of room in your budget to achieve other goals like saving for a rainy day or for retirement. If you plan to live in the house for at least three years, buying is likely the more economical option. However, you also need to make sure you’re prepared to manage the expenses of your own household as you won’t have a landlord to take care of repairs and maintenance expenses. As a homeowner, you’re responsible for the upkeep of your home.
- Can you afford to pay a mortgage and other related expenses? There’s also insurance and property taxes in addition to your current monthly expenses? Other monthly expenses such as water/sewer, garbage collection, and pest control that you might not be paying as renter also need to be factored in.
- Is your financial house in order?
Lenders will look at your income, credit history, and how much debt you have, among other things. Different lenders have different requirements for their loans. Your FICO® scores can impact whether you get a loan or not, and if so, at what interest rate. Keep in mind that the higher your score, the better the mortgage terms you can obtain. Get a copy of your credit report to see how your credit score can be improved if need be.
- Are you prepared to pay a down payment?
Your down payment will depend on the type of mortgage you get. Look into various mortgage options, including those designed for first time homebuyers, and compare the down payment you may need. As an example, on a 15-year fixed-rate mortgage, you’ll need a 10–20% down payment. Having 20% or more means you don’t pay PMI (private mortgage insurance), which basically protects your lender if you stop paying your mortgage.
- Are you better off buying or renting?
Getting Mortgage Pre-approval
There’s plenty to stress about when you’re shopping for a new home, so get your prequalification out of the way first. Pre-approval can be obtained in a few easy steps and will give you peace of mind. You can use this amount in setting your budget and for streamlining your home search to match your budget. Many sellers will only show their properties to buyers with pre-approval. Although
pre-approval is not final, it’s a good indication of the mortgage loan you can eventually obtain.
Finding The Right Palm Springs, CA REALTOR®
As a first-time homebuyer, the guidance of an experienced Palms Springs area real estate agent is crucial when navigating the home buying process, particularly if you’re looking at million dollar homes for sale. You will be spending a lot of time with that agent and you need to mesh. Choose someone relatable and real, and good at talking and negotiating. Here are some pointers on how to find the agent that’s right fit for you.
- Work with a REALTOR®, or a member of the National Association of REALTOR®s (NAR). NAR members are licensed professionals who are committed to a strict Code of Ethics
- Ask for referrals from people you know, as well as other professionals who often work with real estate agents.
- Check into a potential agent’s track record and current listings to determine if they’re the right match for your goals and preferences.
- Talk with a prospective agent’s previous clients to get an idea on how they work
Searching For a Home in the Greater Palms Springs, CA Area
When shopping for your new home, try to be as objective as possible and avoid getting carried away by your emotions. Here are a few tips to consider:
- Make a list of the features you’re looking for in your new home. Identify those that you truly need, such as the size, the number of bedrooms, the location, and the amount of storage. Make a separate list for the amenities that you want, but can live without.
- Identify your ideal neighborhood. Check out our Community Info pages to learn more about the neighborhoods in Palm Springs and the surrounding area.
- Provide your REALTOR® with your lists to guide them in finding the right home for you
- Search for potential homes on your own via the internet or by driving around Palm Springs area neighborhoods that you’re interested in. Ask your agent to arrange for private showings of the available homes you like.
Making an Offer and Signing an Agreement
- Once you find the perfect home, your REALTOR will help you draft an offer letter with a competitive offer price and the contingencies and sweeteners you want to include.
- If the seller accepts your offer, you both will sign a sales agreement and the process goes to escrow.
- Deposit your earnest money into the escrow and work on fulfilling all contingencies before the deadline, including a professional home inspection.
- Finalize the financing for the home by complying with the required paperwork and insurance. The lender will conduct their own appraisal of the property. If they find the home’s value to be less than the agreed sale price, you can negotiate with the seller to lower the price, or agree to shoulder the difference from your own pocket. You may also opt out of the sale.
Closing the Sale
In the greater Palm Springs area and the state of California, closing involves the following steps:
- A title search is conducted, and if everything is in order, a title insurance is prepared
- Your lender sends the paperwork for your loan to the escrow agent
- You sign all closing documents, including the documents for your loan
- The deed or transfer of ownership is recorded with the right municipality
- The funds for the sale are released to the seller and other parties
- You then receive the keys to your new home!
With over 25 years of experience as a top Palms Springs, CA area REALTOR®, Elaine Stewart can guide you to the most valuable homes in the area and assist you with all of your real estate needs. Give Elaine a call today at (760) 668-2399 or get in touch with her here.
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