There is no question that our area’s real estate can be incredibly expensive and highly competitive. The average person in our community cannot afford to buy a home, and rent prices continue to soar. Due to the beauty of our area and the mild climate, we are a hot spot for investors, retirees and the perfect place for a vacation home. If you are looking to buy a house, there are things you can do to prepare and help the process run smoother.
First Things First
Shyne Torrey, Realtor at Alain Pinel Realtors, stresses the importance of meeting with the right people early on. “Do you want tips on getting a down payment together? Talk to a financial advisor. Do you know of the many programs for everyone from the first time home buyer to those who may qualify for a VA loan and much, much more? Again, consult a professional. The first thing I do with my buyers is set up an appointment for them with my in-house mortgage officer. Save yourself time, stress, energy and maybe even money.” Consult all relevant professionals from a financial advisor to the real estate agent to lender. You may even consult a contractor if the homes you’re considering will need work — you’ll want to include those costs when you speak to a financial advisor.
One of the first steps to buying a home is to speak with a loan officer or bank and get pre-approved or pre-qualified. This process involves taking a look at your credit, assets, debts, and income. This process is so important because it helps to set a budget and determine where you can afford to live.
Think Outside of the Box
Jeff McMullen is a local loan officer with Kal Financial and loves working with all clients, but especially first-time home buyers. He is an expert in different loan options, including conventional, FHA and VA loans. When asked about purchasing a home in the area, he said, “Many of the clients I speak to believe they need 20% down to purchase a home in Monterey County. We see many buyers purchasing homes with 5-10% down with purchase prices up to and above $1,000,000. There are more options available once clients move outside of the large bank’s offerings. Whether it’s low down payment options, or other creative income options it’s important to do the research. Just because the big bank down the street says it can’t be done doesn’t mean homeownership isn’t a possibility for you.” Jeff also hosts a first-time home buyer seminar on the second Tuesday of each month. For more information or to register for the class, you can call 831-210-4034 or email jeff@kalfinancial.com .
While there are many assistance programs available, John Filighera, Broker at John Filighera & Associates, Inc. offers a look at the programs offered. “There are a number of programs that help a larger sector of the home buying population. One program is called the Alt-A program. This program lends a helping hand to buyers with credit challenges, unlike conventional loans, which require good credit. The Alt-A loan is often called a” stepping stone” loan; allowing a buyer to refinance into a conventional loan after demonstrating 12 consecutive months of on-time payments. Many of these programs are income-based, but not all.”
First-Time Buyer Programs
Monterey County also offers a First Time Homebuyer Program (FTHB). The program is based on income, and the home must be your primary residence. FTHB provides minimum gap financing to purchase a home in unincorporated areas of the county. Eligible properties include single-family homes, condominiums and mobile homes on permanent foundations. The sub-area of the county determines the maximum purchase price.
The county also has an Inclusionary Housing Program that requires developers to include a certain percentage of affordable housing units in their projects. This program offers homeownership and rental opportunities for households with low to moderate income. East Garrison is offering the inclusionary housing program for the new townhome units that are currently under construction. For more information call 831-755-5390 or visit the county’s website at: www.co.monterey.ca.us/government/departments-a-h/administrative-office/intergovernmental-and-legislative-affairs/economic-development/housing
Affordable first-time homeowner Programs: The California Housing Finance Agency (CalHFA) offers a selection of home-buyer assistance program found here. These are mostly geared toward first-time home buyers with low to moderate incomes. Keep in mind too that in California, you are considered a first-time homebuyer if you have not owned and occupied a home in 3 years.
Alt-A Program: As mentioned before, it helps buyers with credit challenges acquire a home loan. The benefits to this and the VA loan is that they are not limited to low and moderate income peoples.
Help for Veterans
VA Loan: The VA Loan Program is a wonderful benefit of providing home financing to eligible veterans and to help veterans purchase properties with no down payment. Qualified lenders may issue the loan. The benefits include, but are not limited to, historically low-interest rates, no down payment needed and avoiding PMI without requiring to put down 20% of the home cost. See more benefits here and contact your local lender to find out if you qualify.
If you don’t qualify for these programs, don’t fret, there are several things that you can do as a buyer to make your offer desirable in a competitive market. Many homeowners take great pride in their home, and although selling their home is a business transaction, there is also an emotional part. For instance, you can choose to write a buyer introduction letter to share pertinent information about your family, career, why you are moving and why you love the home. Often a personal buyer’s letter is the deciding factor on choosing an offer.
Since this is likely one of the most significant purchases of your life, it is essential to do your research to get the most bang for your buck. Some lenders offer rebates and have special affiliations with real estate agents to provide incentives and credits when using their programs. Homes for Heroes is a program offering .007% of the purchase or sale price of a home back to the client as a way of saying thank you for their service. The Homes for Heroes program was designed to give back, and military (active and retired), law enforcement, firefighters, teachers, nurses and EMS are all able to take advantage of this rebate when buying or selling a home.
The home-buying process is an exciting and nerve-wracking one with lots of moving pieces. I encourage you to all ask questions, even the ones that you think are silly. Happy house hunting!
John Filighera can be reached at jfa@cruzio.com. Shyne Torrey can be reached at storrey@apr.com.
Article co-author Allison Chance, a Realtor, participates in the Homes for Heroes program. She can be reached at 831-296-0114.