Tips for Home Buyers

Tip #1 : Shop For Your Loan

Even though interest rates have hit an all-time low in 2011, do not hesitate to make lenders compete for your business, whether this is your first home purchase or time to upgrade. You should always take the time to compare and understand costs, rates, types of loans (fixed vs. ARM), upfront discounts, etc.

Also, get savvy about the many state and federal financial programs designed to help new and existing homeowners such as FHA or VA loans. Check in particular the Santa Clara County Home Buyer Loans Programs.

Once this selection process is over, the key is then to find out how much you can borrow, which  is essential before engaging on a home search quest with a Realtor.

Tip #2 : Get Pre-Approved

Most San Jose real estate agents will ask for a pre-approval letter from your lender before partnering with you and initiating any real estate research.

A pre-approval letter will confirm that your application has been processed and that your loan is approved. Many home buyers confuse a pre-qualified letter with a pre-approval letter. Being pre-qualified only means that, based on overall financial information provided to your loan officer, your lender has estimated that you are eligible to receive a loan and will generally give you an estimate of the mortgage amount for which you may qualify.

Tip #3: Buy What You Can Afford

You are better off buying a smaller house that you can pay off quickly and buy a bigger one in 5 years instead of buying a property which price tag exceeds your means and running the risk of being forced into a short sale and ultimately being foreclosed.

Providing your monthly payments are made on time every month,  this purchasing strategy will enable you to build equity, establish credibility with lenders, benefit from substantial tax deductions and potentially realize capital gains depending on the trend of the real estate market in the area where you purchased.

Tip #4: Renovate Wisely

If you intend to upgrade or renovate the house you just bought, invest the most money in your kitchen and/or bathrooms, which is where most of the resale value of any house resides.