Home Buying Process from Start to Finish
Protect Yourself against Fraud during your Move
Don't let scammers burst your bubble! The Federal Motor Carrier Safety Administration offers free resources and tools to help prepare for your move and to protect yourself from moving fraud. Before moving your household goods interstate, movers are required to give you the “Your Rights and Responsibilities When You Move” booklet and FMCSA's Ready to Move brochure to help you understand the documents that a mover will ask you to sign, and explains your rights if your household goods are lost or damaged. https://www.fmcsa.dot.gov/protect-your-move
Questions to Ask When Interviewing Lenders
ABOUT THEM
How long have you been in the mortgage business?
What sets you apart?
Why do you do what you do?
When are you available to clients? 8-5, etc.
Why do you work for the firm you work for?
What percentage of your business is purchase vs. Refinance?
COMMUNICATIONS
If I need a pre-approval on a weekend, will I be able to reach you?
We work during the day and it is tough to talk during business hours, can we reach you in the evening when questions come up?
Are you always available for my questions/concerns?
Will you be my main point of contact until the loan closes? If not, will your assistant be available to answer my questions?
How often will you communicate with us regarding the progress of our loan?
THE PROCESS
Once I submit my application, how long will it take to get pre-approved and the final approval?
Are the appraisers or appraisal management companies that you company uses local?
How are the interest rates and origination points/credits related?
How do I know which loan product is the best for me?
When and how do you decide to lock the interest rate?
When can I lift the loan contingency?
Do you charge any origination, or discount fees/points?
What are the total lender costs, excluding taxes, escrow and title, that I will be charged for this loan?
How often do you close on time?
Consumer Warning: Underfunded Homeowners Associations
By Joseph Aiu (Statewide Subdivisions Compliance) California Department of Real Estate
The California Department of Real Estate (DRE) has issued this warning as a result of the growing number of homeowners associations (HOAs) that do not have sufficient funds or reserves to adequately maintain the common areas in the housing developments for which the HOA is responsible.
This warning will explain the negative effects and impacts of an underfunded HOA, offer suggestions on how to gauge the financial health of an HOA, and discuss some typical causes of an underfunded HOA.
Negative Effects of an Underfunded HOA:
An underfunded budget may cause unexpected expenses for the owners living in a CID and/or have a deleterious affect on the value or condition of an owner’s property. If the HOA cannot properly maintain the common areas due to budget constraints, roads, pools, exterior paint, and roofs may fall into disrepair. Moreover, underfunded HOA budgets may create pitfalls for homebuyers who do not investigate the financial health of the HOA prior to buying into a CID. HOAs facing severely underfunded budgets often must resort to levying special assessments on the owners living within the CID in order to pay for needed repairs or maintenance. Special assessments can run into the tens of thousands of dollars so owners and buyers would be wise to look into the financial health of the HOA to ensure they aren’t exposing themselves to unexpected expenditures and financial problems.
How to know if the HOA is Financially Healthy:
HOAs are required to produce a yearly budget and to furnish it to the owners in the association. In addition, at least once every three years, the HOA is required to review the major components of the CID that the association is obligated to repair, replace, restore, or maintain, as part of a study of the reserve account requirements, to ensure sufficient funds are, or will be, available to adequately maintain the common areas. Included in the budget documents, the HOA is required to provide a summary of its reserves and whether the reserves are adequate to maintain all the major components of the CID. This summary disclosure document is an excellent tool to determine the long term financial health of any HOA.
In addition, the law affords a potential buyer or an owner in an association the opportunity to review the HOA’s financial documents. For a potential buyer, the financial documents may be requested from the seller. For an owner in the association, the financials should be received from the HOA at least annually.
Typical Causes of HOA Underfunding:
Foreclosures are a significant cause of underfunded HOA budgets. Homeowners in foreclosure often do not make their assessment payments. Due to the length of the foreclosure process, the non-payment of assessments may cover a period of 90 days to a few years. Although HOAs have the ability to place a lien against a homeowner’s property for non-payment of assessments, HOA liens are often extinguished at the foreclosure sale because the value of the property is insufficient to pay off all the liens against the property. This is especially true in cases where the value of the property is less than the mortgage. The end result is the HOA ends up with less than the projected assessment income, which leads to an underfunded budget.
Inadequate planning on behalf of an HOA board can also lead to an underfunded budget. In instances where a CID or HOA is facing dire economic conditions, an HOA board may succumb to the pressure of its association members and not increase assessments or even reduce assessments and forego on-going maintenance. These types of bad decisions inevitably result in the HOA levying special assessments against the owners to address health and safety issues that arise from neglect. In addition, reduced care and upkeep of a CID’s common areas result in the inability to sell or secure financing because of the dilapidated condition of the property.
HOAs that rely on inadequate assessment collection procedures usually suffer from insufficient funding to satisfy their financial obligations. For example, homeowners who are not in foreclosure but refuse to pay their assessments may rely on the association’s poor collection process as a way to delay making their assessment payments. This may result in a “domino effect” where other members stop paying their assessments under the rationale that since others are not paying, why should they.
What to be Aware of when a CID has an Underfunded Budget:
Special assessments. Inevitably, underfunded budgets lead to special assessments as mentioned above. This is the common method HOAs use to satisfy financial obligations. While an HOA is limited on how much it can increase assessments - typically 5% per year - a special assessment can be assessed in order to resolve a health and safety issue. This means the entire cost to make a repair can be levied against all its members, or members who are paying assessments. Special assessments can be tens of thousands of dollars.
Inability to sell or declining property values. It can be very difficult to sell a home if the HOA’s assets are inadequate to satisfy its financial obligations. Buyers will be leery of special assessments and/or increased monthly assessments. Moreover, property values may depreciate dramatically because of deferred maintenance and inadequate funds to satisfy financial obligations.
Inability to secure financing. Lenders (subject to underwriting guidelines from Fannie Mae or Freddie Mac) may deny funding loans whenever an association funds less than 10% of its operating funds into its reserves. In addition, lenders are reluctant to fund loans when an association cannot meet its financial obligations.
Quick Tips for Evaluating the Financial Health of an HOA:
If you are a buyer, demand that the seller provide you with copies of the most current financials for your review.
If you are an owner, make sure that you are given annual financial reports, especially the delinquency report and those pertaining to the adequacy of the reserve account.
If you are a buyer, do a physical review of the property and observe how the common areas are maintained. For example, assess the condition of exterior paint, amenities, roads, roofs, drives, fencing, etc.
If you are an owner, be involved with the board and its decisions, especially when you see deferred maintenance of common areas or are subject to special assessments.
Conclusion:
The issues raised in this warning, along with the suggested steps to take to avoid potential financial problems, are not all inclusive. Each project in California may have unique issues that can only be addressed by you, as either the buyer or owner, performing your due diligence.
However, what appears to be a common thread in today’s real estate economic climate is that many projects are falling victim to hard times and the result is the underfunding of HOA budgets.
Please refer to DRE’s web site, www.dre.ca.gov for additional information on Common Interest Subdivisions, including the brochure Living in a Common Interest Development.
What’s the difference: Condominium and PUD Ownership
Questions for Buyers to Ask the Condo Board
HOAs: Protecting Home Values
How do rising interest rates impact my purchase?
The Home Buyer’s Action Plan
Make this year the time you buy a home or the year you set yourself up to buy one. Maybe you’re currently a renter, or you’re in a home that no longer fits your lifestyle. Either way, we’re here to help you, using our home buyer’s action plan.
Start with your finances
What is your current financial situation? Is your savings plan sporadic or do you consistently set a portion of each paycheck aside for your future home?
Creating and sticking to a budget is the first step to saving more money. Even if you don’t think you currently have enough disposable income, with a little work it’s easier than you think to cut back on your expenses.
Take a look at what you’re currently spending and take note. Determine:
What’s essential vs. non-essential
What’s recurring vs. random/one-time
What expenses are realistic vs. ones that could be replaced with cheaper options
Once you’ve identified what’s what when it comes to your spending habits, figure out which can be cut out completely and which can be scaled back. Create a new budget and then get creative in order to meet it.
Rent and car payments are going to be the same every month, but your grocery bills can be cut down by shopping at a grocery outlet or buying less to prevent waste. Switching to a new cell phone provider could cut down on your monthly costs. Instead of hitting the drive-through Starbucks on your way to work, make your own coffee at home, and pack your lunch while you’re at it. No, you don’t have to stop putting avocados on your salads. This is Southern California, after all!
With a few lifestyle changes, buying a Southern California home can be within your reach.
Hold on to your savings
Once you’ve spent a few months cutting back on non-essential expenses for a few months, take a look at how much you’ve been saving on average each month, and then start automatically saving that amount each month. This will eventually become your down payment.
Ask for assistance
Getting married? Having a baby? Celebrating your birthday? That means gifts for you!
Instead of asking for traditional gifts like kitchen appliances, extra baby clothes that will soon be outgrown, and birthday dinners, inform your friends and relatives of your decision to buy a home, and request that they help contribute to your savings instead of buying you things you don’t necessarily need.
Though it might seem like a strange request at first, lots of home buyers, especially first-time buyers, are following this technique in order to expedite their purchase. Plus, your friends and family should be rooting for you and be happy to lend a hand.
As your agent, we can help you determine your needs
First, answer these basic home buyer questions. They will not only help you understand what you need, but they will also help me as your agent.
How soon do you want to be in your new home? Knowing this will help people who are assisting you to get on your timeline. These include your agent, loan officers, appraisers, escrow officers, and even the seller.
Who is involved in the homebuying process other than yourself? They will be involved the whole way, even if it’s a family member who is assisting with your funds. The decision-makers need to be identified, so everyone is lined up and ready to be involved when necessary.
Does anyone have a home they need to sell first in order for you to buy? If your parents or relatives don’t have a home to sell to help you buy, my next question is, have you gone through the pre-approval process yet? Or if paying cash, do you or your family have those funds ready to present to a seller when asked? You can’t make an offer without proof of funds.
What’s your current living situation? Are you on a lease that you have to break, are you renting month to month, still living at home? It’s important to know so you can prepare for a move.
Do you need a home that is recently renovated and already has all or most of the features you need? Or, are you willing to move into a home that needs some updates but is ultimately move-in ready?
Some buyers don’t want to have to put in any work once they move into their new home. But with tight inventory and competitive markets, sometimes you have to think outside the box. Finding a home in a desirable area and priced lower than your budget but doesn’t necessarily check all your boxes might be the way to go. Or, maybe you do find the home of our dreams but it’s just outside your target neighborhood. Either way, making small sacrifices can save you money or shorten your search time, so don’t discount options unless you’ve weighed all the pros and cons.
As your real estate agent we can show you options out there so you can determine which ones are right for you. You might end up with more options than you had before.
Prepare to enter the market
Once you’ve saved up enough for a down payment, there are a few steps to take before you jump right into the home search.
In today’s competitive market, it’s important to be fully prepared to make an offer on a home the second you find one you like. You’ll want to get pre-qualified, which basically means determining how much you can afford, and pre-approved, which means getting your mortgage loan amount approved.
We can walk you through the process and help you determine everything needed in order to proceed. We can educate you on things like when is the best time to buy a house, what escrow is and how it works, and when closing costs are due. Plus, we partner with trusted companies that will protect you every step of the way.
You’ll want to partner with a responsible mortgage lender, like HomeServices Lending, so you’re ready to make an offer quickly and confidently.
Find your perfect
Once you’re feeling confident about what your needs are, it’s time to start searching for and touring potential homes.
Remember that even if the perfect home you’ve envisioned doesn’t exist, the potential to buy and improve upon an existing home is one of the best advantages of owning your own home.
If you’re not in a rush to buy and nothing is catching your eye, waiting can mean more time to save money for your down payment–but it also can mean a fluctuating market. Keep an open dialogue with your agent so they know what your priorities are and what your ideal timeline is so they can keep an eye on the market and know how to advise you.
Every buyer is different
This action plan is designed to help you find your perfect home, but every buyer is different. If you know you’re not going to be ready to buy this year, if after following these steps you’re still not ready at the end of the year, following this plan will still get you that much closer.
Start today and you’ll thank yourself later.
California Law Requires Water Conserving Plumbing Fixtures
Check out communities before Buying
How Safe is the Community
CrimeMapping.com provides the public with valuable information about recent crime activity in their neighborhood. Crime data is extracted on a regular basis from each department's records system so that the information being viewed through a Web browser is the most current available.
Community Info and Stats
City-Data.com collects and analyzes data from a variety of government and private sources, creating detailed, informative profiles for every city in the United States from crime rates to weather patterns.
Home Buying One Step at a Time
- Initial consultation with Chrissy & Steven to evaluate your needs
As professional real estate agents, we have extensive market knowledge and will work to find the right home for you. Once we establish your needs, we will provide guidance to financial institutions where you can obtain information in order to get the best financing available. - Identify property to Buy
We will forward you homes based upon the criteria you establish. The more precise and direct you are, the more successful your search will be. - Determine Seller’s motivation
Once you have found the home that you wish to purchase, we can assist with the necessary research to help you structure an effective offer. - Write offer to purchase
We will draft the Purchase Agreement and advise you on protective contingencies, customary practices, and local regulations. At this time you will need to provide an “earnest money” deposit, usually from 1 to 3% of the purchase price (the deposit is not cashed until your offer has been accepted by the Seller). - Presentation of offer
We will present your offer to the Seller and the Seller’s agent. The Seller has three options: they can accept your offer, counter your offer, or reject your offer. - Seller’s response
We will review the Seller’s response with you and negotiate to reach a final agreement. - Open Escrow
When the Purchase Agreement is accepted and signed by all parties, we will assist in opening escrow for you. At this time your earnest money will be deposited. The escrow will receive, hold and disburse all funds associated with your transaction. - Contingency time period
This is the time allowed per your Purchase Agreement to obtain financing, perform inspections, and satisfy any other contingencies to which your purchase is subject. Typical contingencies include:- Approval of the Seller’s Transfer Disclosure Statement
- Approval of the Preliminary Report from the Title Company
- Loan approval, including an appraisal of the property
- Physical inspections of the property
- Pest inspection and certification
- Homeowner’s insurance
We can help coordinate between your Insurance Agent and the Escrow Officer to make sure your policy is in effect at close of escrow. - Down payment funds
You will need a Cashier’s Check or money transfer several days prior to the closing date of escrow. - Close Escrow
When all of the conditions of the Purchase Agreement have been met, you will sign your loan documents and closing papers. You will deposit the balance of your down payment and closing costs to your lender will deposit the balance of the purchase price. The Deed will then be recorded at the County Recorder’s office and you will take ownership of your home.
Mistakes Buyers Make
Check out Schools Before You Buy
School Districts and Reviews
Before you buy, learn more about school districts and individual schools serving your neighborhood choices.
Poway/Rancho Bernardo/Carmel Mountain Ranch/Rancho Penasquitos
Del Sur/4s Ranch/Santa Luz/Torrey HighLands
Scripps Ranch/Mira Mesa
Carmel Valley/Solana Beach/Del Mar
School Info and Ratings
Trusted ratings and school information help parents find the right school for their family. Niche and GreatSchools are great resources for information on schools.
