What do I need to do first?
Step #1 – Find a Realtor that you trust.
Step #2 – Find a mortgage broker that you trust. Your Realtor will help you find the perfect home; your mortgage broker will help you find the perfect loan. Six months, or even a year, before you expect to buy a house is a great lead time to allow you to get to know the housing market, to figure out what elements are “must haves” or just simply “wanna haves”, and to do any credit repair or enhancement for loan qualifying purposes.
Don’t be afraid to interview different Realtors. Call them up, tell them your looking for an agent, have them show you some homes, and ask them for some references. If an agent isn’t willing to do these things to get your business, they probably won’t be willing to much to keep your business either.
Can I afford to buy a house?
Ultimately this is a question for your mortgage broker, but if you’re paying rent, then you have a baseline for being able to afford a home. Keep in mind that you will be gaining equity, gaining tax right-offs, and gaining lifestyle freedom. Make sure you figure all of these values into your analysis. The conventional wisdom is that you need to be confident that you will be in the same general area for 3-5 years in order to recoup your closing costs and break even on your investment.
Also, keep in mind that you can use an FHA first-time homebuyer loan to by an apartment with up to 4 units, as long as you live in one of the units. So if you will be living in an apartment anyway, maybe you’d like to be buying it instead of just renting it. Give me a call or e-mail if you’d like to know more about this option.
What will my monthly payments be?
Ultimately this is a question for your mortgage broker. Typically your house payment has 4 pieces:
1) Principal on the loan
2) Interest on the loan
Your principal and interest payments can be figured with a mortgage calculator linked to here.
Your taxes in Humboldt County, California can be estimated at 1.1% of your purchase price.
Finally, insurance can run anywhere from $50/mo to $200/mo or more. Call your insurance agent to get an accurate estimate.