10 Steps to Buying your First Home!
1) Find a realtor – make sure your realtor goes through the home buying process with you. What are the steps and how will they help you navigate through the process?
2) Talk to a lender – they will run your credit report (this is also something you can also do yourself) and look at your income and savings to help you determine how much you can borrow.
3) Make a list of what is important for you and your family. – these are your ‘non-negotiables’ – this could be a home office, a pool, garage – it’s different for everyone!
4) Think about how long you will be in the home. Is this a home you will be in for 3 years, 10 years or 30 years? Are you planning on having kids (or more kids), will you have elderly parents moving in with you? These are all things to consider when buying your home!
5) Talk with your realtor about what your needs are – how many bedrooms & bathrooms, 1 floor or 2 floors, pool or no pool? Research neighborhoods and schools.
6) Get pre approved for a loan – your lender will work with you to get pre-approved for a loan, pre-approval is usually required to put an offer in on a new home and shows the sellers that you are able to purchase the property.
7) Start looking at homes – your realtor will provide listings that fit both your criteria and your budget and will set up showings for you to view homes.
8) Put an offer in on a home – Once you find your perfect home, you will work together with your realtor to put in an offer. There will usually be negotiations back and forth and more documents to sign!
9) Home Inspections/Appraisals – Once your offer is approved, you will then have a home inspection, the inspector will provide you a detailed report of all the items in the home that may need repaired or replaced. After that is complete, the lender will usually require an appraisal. The appraisal is an unbiased estimate of the fair market value for the home.
10) Closing – Your realtor and lender will work to make sure this day goes smoothly – this is where you will sign all your loan documents and take title of your new home!
Recession Fears
I have had a couple of clients state that they don’t want to buy because they are hearing about a possible recession. I reached out to Josh Messina, who is a mortgage home originator with Homebridge Financial Services. He is my go-to partner in lending and he has some great information!
We are hearing a lot of talk about a recession. Should I put off buying a home?
You do hear a lot of noise about the recession on the internet and various media outlets, but that doesn’t mean it will have a direct impact on housing. I believe there may be a slight pull back or decrease in our current housing appreciation levels, but to see homes drop like they did during the Great Recession is a stretch. Now is a great time to buy, rates are low. With the drop in rates you could see your purchase power increase by $25,000 or more.
The Federal Reserve cut interest rates, isn’t this usually done only during a recession? Doesn’t that show we are in a recession?
The Federal Reserve typically cuts interest rate to stimulate economic growth and encourage more borrowing/spending when signs of inflation and global uncertainty are prevalent. Typically, yes we see the Fed cut rates during recessionary environments. With some indicators saying we are in a slowing economy the Fed mention this is an “insurance cut” to market volatility and the trade war.
Historically, how has a recession affected the housing market?
Each recession has left its mark on the housing market, none more severe than the 2008/2009 Great Recession. The Great Recession was caused by the subprime mortgage collapse and major default by many home owners. They were in homes they couldn’t afford. It seems like yesterday dooms day happened and the economy began to unravel, Americans started losing their jobs, which made it that much more difficult to pay your mortgage. Lending laws have tightened up since then and you can only purchase at what you can afford. I do not see the same underlying effects if a recession does come. Like I said earlier, we may see a decrease an appreciation but I do not see home values drop below what people owe.
To follow up on this, here are the stats on the last 5 recession as it relates to home appreciation/depreciation:
- 1980 – Appreciated by 6.1%
- 1981 – Appreciated by 3.5%
- 1991 – Depreciated by 1.9%
- 2001 – Appreciated by 6.6%
- 2008 (Housing Collapse) – Depreciated by 19.7%
In all, homes have appreciated 3 of the last 5 recessions
Looking to buy? Josh and I are both here to help you navigate the West Valley market!
