I set an intention. And that was to be a homeowner in 2020. Paying all this money for rent finally feels like a waste and I’ve moved so many times in LA I long to call a place home. I’ve moved every year sometimes more than once a year since my 8 years of living in LA.
So I decided this year it was time and I’m so happy the Berkshire Hathaway HomeServices California Properties team was more than willing to help in the process. We are not looking to buy until the end of the year/early net year but we wanted to start the process now so it wasn’t a big surprise when the time actually comes. I wanted to learn all the things we needed to buy a home, what our credit score and income would ideally allow us to buy, and what our mortgage payment would possibly look like. I also wanted to know HOW you even start looking for a home.
We learned A LOT in a short time and honestly the idea of buying a house seems a bit less daunting to me now. I know many times we think something this big is out of our reach but honestly once you face many things in life head on, you realize it’s not as scary as it seemed. Now buying a house, something that felt like a far away dream actually seems feasible to me now.
Here are some tips we learned from the lovely team at Berkshire Hathaway:
FINANCES
First things first, get your finances in order. I feel like this is the most daunting part for most of us. I can barely get through my taxes every year, like how can I even do this for a home? You need to know your major bills like car payment (if you own), house/apartment rent, credit card payments etc.
LENDER
I thought the first step in buying a home (besides getting your finances and credit in order) is to start looking at houses and they try to get a loan for the house you like. I was definitely wrong lol. The first step in buying a home is going to a lender. I wouldn’t recommend doing this step unless you are READY. They are going to look at three things: Income, Assets, and Credit.
Income can be shown throw pay stubs and bank statements. Tax returns are especially important if you work for yourself. They take the last two years income and calculate the average of that as your income.
Assets: They look through at least 2 months of bank statements and anything else you may already own.
Credit Check: Is good for 120 days so if you don’t find a house within that time frame, they would have to run it again. Also if you are looking to buy with your significant other they will go based on whoever has the lower credit score.
They analyze all these things for automated approval. The underwriter a can go in a make the final decision though, they make the formal loan approval.
After closing, many banks may require a reserve, meaning you have to show a certain amount in your bank account. For example 6 months worth of mortgage payments. So if the mortgage would be $4000 a month you need at least $24,000 in your bank account. This does not include what you will spend on your down payment or any other fees.
MORTGAGE
Your mortgage payment is a total of the mortgage, property taxes, and insurance every month. That’s something I didn’t know actually.
There are also first time buyer programs but the lender we spoke to said sometimes there are other programs that could be better and they would be able to look into it and find the best rates.
Honestly, it was really helpful talking to a lender and getting a little insight on all the things we would need to get started in the process. Based on the information we shared about our finances, she was able to map out a general idea of what we would be looking at for approval.
After we spoke to the lender, we met with Armen and Hazel from SPRE Group and they showed us some houses at the price point we would possibly be approved for. It was so fun looking at condos and houses and really made me so excited to truly call a place home soon. I’ve really been debating between condo and house because I would love to rent the condo out as an investment property in a few years. Armen did let us know that the rental market for houses was very good in LA too so I guess starting with a small house could be an option. I really loved the vibe of a house and having a backyard but we’ll see.
Also looking really gave us an idea of how far our money can go in LA. Turns out not very far haha. The housing market in LA is very expensive but we’ve been saving and preparing for it!
The team at Berkshire Hathaway have been so helpful in our beginning journey to home ownership. I can’t wait until we are ready READY to look for a house! In the mean time, thanks to their amazing team, we know what we need to move forward. I highly recommend using Berkshire Hathaway if you are looking for a home. Armen and Hazel were great and were not only informative but honest, they didn’t sugar coat the process or make pressure on into any decisions we weren’t ready for.
We can’t wait to continue this journey and take you along! I think this makes me a grown up now. lol
