If you're getting serious about buying a house, there are a few things you can do to start your search on the right foot.
Talk to a local lender and get qualified for financing.
There are a few different common types of loans and it’s a helpful starting place to find out what you can qualify for. The three types are: conventional, FHA, and VA financing.
For conventional financing, through a banking institution, you'll need to have at least 10% for your down payment. If you can come up with 20% or more, that is the best case scenario because you can avoid paying mortgage insurance and in most cases obtain a lower interest rate.
The Federal Housing Administration (FHA) offers loans backed by the federal government. For FHA financing, you'll need to have at least 3.5% down. The maximum loan amount for an FHA purchase in San Mateo County is $625,500, so for any property over $648,500, you would need come up with a larger down payment than 3.5%.
- For VA financing, you can buy a home with 0% down. The maximum loan amount is $625,500.
Determine how much you're willing and able to spend monthly on housing payments.
Go through your spending habits over the last 12 months or so and get a sense of what your normal monthly costs are. Once you figure this out, think about where you see your life headed in the next 5-10 years. Are you planning to get married, have a baby, buy a new car, travel, or take care of an aging family member? It's also important to account for any changes in income you might have. I think it's important to use your current income, rather than a projected income.
Talk to your tax person to figure out how buying a home will impact your tax situation.
Becoming a homeowner means that you’re also responsible for additional expenses like paying property tax, fire insurance, and maintenance costs. On the other hand, you will be able to write off mortgage interest and possibly other costs associated with owning a home.
Figure out where you want to live.
Think about your commute to and from work, what different areas have to offer, and where you would generally feel comfortable and could envision yourself living for years. You can always change the way a home looks and feels, but you can never change where it's located.
Talk to a local and reputable real estate agent.
Looking online is great, but it's impossible to have a complete understanding of what you can buy and understand the ins and outs without getting advice from a pro. A (good) real estate agent will give you a better idea of what you'll can afford in the areas you're interested in and can guide you through the process.
Cliff Whearley has been a resident of Redwood City for 23 years. He is a Realtor at Dwell Realtors, Inc. and has been practicing real estate since 2007. If you have any real estate questions, he would love to help!