Tips for Home Buyers

Tip #1 : Shop For Your Loan

With interest rates still at low level (under 5%) in 2011, do not hesitate to approach lenders and make them compete for your mortgage, whether this is your first home purchase or  if you are looking to upgrade. Take the time to review and  understands all variables, including upfront costs and discounts, rates, types of loans (fixed vs. ARM), penalties.

Also, spend some time reading about the many State and Federal Housing programs available to help new and current homeowners such as FHA or VA loans. Check out regularly the Santa Clara County Home Buyer Loans Programs.

Once the selection process is over, the key is to find out in partnership with your lender how much money you can borrow, which is an essential step to complete before even engaging with a local San Jose Realtor.

Tip #2 : Get Pre-Approved By Your Bank

Most San Jose Realtors will ask you to be pre-approved by your bank before initiating any property search on your behalf.

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 your overall financial situation, 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: Start Small

Savvy home buyers always start buying a smaller house that they can pay off quickly and  typically shop for a bigger home later instead of buying a home which price tag exceeds their  financial means, thus avoiding the risk of being forced into a short sale position and ultimately being foreclosed.

Providing your monthly payments are timely, this buying strategy will enable you to build equity, establish credibility with financial institutions, benefit from significant tax deductions over time and potentially realize capital gains depending on the trend of the real estate market in the San Jose area where you purchased. Be sure to buy a home close to a top-rated school to maximize your capital gains and your equity.

Tip #4: Renovate Smartly

If you intend to invest in the house you just bought, make sure to spend the most money in the kitchen and bathrooms, which is where most of the resale value of any house resides. The quality, brands and age of kitchen appliances in a home for sale is a critical factor for potential buyers.