Christi Nelson's Lake Oroville Real Estate Blog

 Mortgage interest rates dropped as well as home prices. You have decided its time to buy a house. Now what? Over the next few days I will take you through the process of what to expect when buying a home.

If you’ve never bought a home before or if you currently own a home but have never bought and sold at the same time, the process can seem intimidating. You can ease your anxiety by making a game plan and choosing the best team of professionals you can find.

The two key players on your team are the mortgage person and the real estate agent. Once you have these selected, they can help you line up the additional help you need.

The first step is to find out how much you can afford and what type of loan you will be getting. A lender will qualify you for a certain loan amount depending on how much cash you have available for a down payment and closing costs — the various fees associated with buying or selling a home. Depending on your loan, the house may have to qualify as well.

Other relevant factors are your credit score, your verifiable income and what type mortgage you decide to use for your purchase. There are a lot of different mortgage options: 30-year fixed-rate mortgages, 15-year fixed, interest-only, as well as various types of adjustable-rate mortgages.

Once you know how much you can afford, your mortgage broker or lender can provide you with a pre-approval letter. This is key in the Oroville Real Estate market today with foreclosures, short sales and seller’s alike. This requires that you complete a loan application and have your credit checked. This will put you in a good bargaining position with the seller.

While you’re checking on financing, you should also find a real estate agent, if you don’t already have one. If you’ve never bought a home before, you should use an agent who is a good communicator and who will take the time to explain the process. Also, keep in mind that your agent will be working with the other parties in the transaction. You want someone you trust and who you are sure will represent you professionally and work diligent on your behalf.

With this ground work completed, you are ready to seriously hunt for a home!

So in our office, we are witnessing many things going on for all the “First-time Homebuyers”. Especially if trying to take advantage of the tax credit, as they are under a time line.  Many of them had no idea what the process of buying a house was. Like talking to a lender, getting pre qualified, learning about the different loan types, learning what properties they would be looking for etc.. they did not speak to a realtor first .You should always consult a realtor, they will educate and guide you through the buying process. Oroville Real Estate

Several buyers went out and traded that old “Clunker” in to get a new car! Don’t they always smell so good!  Then they find out they qualified for the home but cant now because of the “New Car” payment or they are qualified for less..its sad really.  Most would have waited on the car, if they had only known what it was going to do to their dream of home ownership. Oroville Homes

 Majority of the first time buyers also qualifying for the same properties as all the other first time buyers. Majority are properties that are in foreclosure, short sales or are in such bad shape they don’t qualify for the loan. Typically first time buyers are FHA loans. These lower priced properties are getting offers same day and sometimes multiple offers, which multiple is never fun with the banks!

So I thought I would put a few key notes in here I thought might help.  I guess its information and advice.

 It is still a GREAT time to buy! Interest rates are still great and property prices are down. The Magic Combination.

The Tax Credit

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers. You should consult you tax advisor.

Who Qualifies?

First-time home buyers who purchase a home between January 1, 2009 and December 1, 2009. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. You must have closed escrow by midnight November 30th.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale. Consult your  tax advisor on this if you do decide to sell.

Short Sales

These can be very attractive. The sellers have taken care of the home , they are usually in good condition and the price is right!.Perfect! However, it is critical that buyers understand the time frames for short sales before they make an offer. Although response times vary from lender to lender, it can take two weeks or as long as 60 days to receive an approval of a short sale from a lender. With the tax credit time frame running out, it could be a real gamble to get it closed on time. 

Foreclosures / Bank Owned

These are usually priced well for the first time buyers. A foreclosure can be that perfect price and they usually close within a realistic time frame. These however need to be checked carefully as they may need repairs that the appraiser will make note of. These will need to be repaired for an FHA loan. FHA loans are stricter with the condition of the property.  Banks may do repairs but most of the time they only care about their bottom line, which didn’t include repairs..

Most properties under $150,000, get ALOT of activity. As soon as they come on the market, there are multiple agents and buyers looking. If you like it ,dont wait. It will either end up with multiple offers and could price you out or it will be gone!

I guess most importantly…Do Not buy ANYTHING during your escrow process. It can change your credit score and/or you debt to income and cause you to lose your loan and so the house.

Thought we could use some positive news! 

The National Association of Realtors®   reported for the first time in five years, existing-home sales have increased for four months in a row. The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999. read more..

On that note, the tax credit is due to run out soon (Nov 30th) so if you are on the fence, act now!

You should be actively looking for a home at this point. Escrow process is averaging 45 days in our oroville market. You would need to have your property going into the escrow process around mid September, as you need to give yourself a little buffer for the whole loan process. This is assuming you are not trying to purchase a foreclosure or a short sale, as they are typically taking much longer just to get an accepted offer. The Oroville market is experiencing multiple offers on many of the lower priced properties. If your offer isnt accepted, this puts you back on the search for a new home!

So take advantage of this great opportunity!

 While chatting with other parents at a baseball game, we began to discuss the market and if it was the right time to buy. As we discussed how property values have dropped and interest rates were still at an all time low. I said “Yes, now is absolutely the time to buy!” One of the parents made a statement that was amazing to me. He said “sure that’s what all Realtors would say” Of course that’s what we would say! That is what our profession is all about. Educating the public as to what the market is doing and what they should do if thinking about buying real estate.

Consumers, who are hesitant about purchasing a home today because they fear price depreciation, need to understand that real estate is cyclical and that prices will increase again. Home buyers should view a house as a long-term investment and not be fixated on short-term prices. Consumers should purchase a house if they plan to live in or hold the property for at least several years. This will allow the market to stabilize and homeowners to possibly profit from their investment, if they decide to sell. 

Interest rates are still at a fantastic low, especially if you compare it to the market of the 80’s where they could be up to 18%. That’s like charging the purchase of a home on a credit card!

So as buyers have been sitting on the fence waiting for the bottom and low interest rates, the rates are starting to creep up. 

Here is an example of the difference in a mortgage payment with a small change in interest rate:

Weekly national mortgage survey

So the answer is Yes, now is the time to buy.

Happy Househunting!