Complete Home Buying Guide
Your step-by-step roadmap from pre-approval to closing on your dream home in Orange County and Los Angeles.
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Step 1: Get Your Finances in Order
Before you start house hunting, it's crucial to understand your financial situation.
Check Your Credit Score
Your credit score is one of the most important factors in getting approved for a mortgage and securing a good interest rate.
- 740+: Excellent - Best interest rates
- 680-739: Good - Competitive rates
- 620-679: Fair - May need higher down payment
- Below 620: Poor - May need to improve before buying
You can check your credit score for free at AnnualCreditReport.com or through your bank.
Calculate Your Budget
Use the 28/36 rule to determine how much house you can afford:
- 28% Rule: Your monthly housing costs (mortgage, taxes, insurance) shouldn't exceed 28% of your gross monthly income
- 36% Rule: Your total debt payments (housing + other debts) shouldn't exceed 36% of your gross monthly income
Example: If you make $10,000/month, your housing costs should be no more than $2,800/month, and total debt no more than $3,600/month.
Save for Down Payment
While some loan programs allow as little as 3% down, here's what to consider:
- 20% down: Avoids Private Mortgage Insurance (PMI), better loan terms
- 10-15% down: Good middle ground, may have PMI
- 3-5% down: FHA or conventional loans, requires PMI
- 0% down: VA loans (for veterans) or USDA loans (rural areas)
Don't forget: You'll also need money for closing costs (2-5% of home price), moving expenses, and an emergency fund.
Step 2: Get Pre-Approved for a Mortgage
A pre-approval letter shows sellers you're serious and financially qualified.
What You'll Need
- Proof of income (W-2s, pay stubs, tax returns)
- Bank statements (2-3 months)
- Employment verification
- List of debts and monthly payments
- Government-issued ID
- Social Security number
Types of Mortgages
Fixed-Rate Mortgage
Interest rate stays the same for the entire loan term (15, 20, or 30 years). Best for long-term stability.
Adjustable-Rate Mortgage (ARM)
Lower initial rate that adjusts after a set period. Good if you plan to move or refinance.
FHA Loan
Government-backed loan with low down payment (3.5%). Good for first-time buyers.
VA Loan
Zero down payment for eligible veterans and active military. No PMI required.
Pro Tip: Get pre-approved from multiple lenders to compare rates and terms. This won't hurt your credit score if done within a 45-day window.
Step 3: Find the Right Real Estate Agent
A great agent is your advocate throughout the entire home buying process.
What to Look For
- Local expertise: Knows Orange County and Los Angeles markets inside and out
- Experience: Has helped buyers in your price range and desired areas
- Communication: Responsive and keeps you informed
- Negotiation skills: Gets you the best deal possible
- Network: Connections with lenders, inspectors, and other professionals
Questions to Ask Potential Agents
- How many buyers have you helped in the past year?
- What neighborhoods do you specialize in?
- How do you help buyers compete in a competitive market?
- What's your communication style and availability?
- Can you provide references from recent buyers?
Step 4: Start House Hunting
Now the fun part begins - finding your dream home!
Create Your Wish List
Make a list of must-haves vs. nice-to-haves:
Must-Haves
- • Number of bedrooms/bathrooms
- • Location/neighborhood
- • School district
- • Commute distance
- • Budget range
Nice-to-Haves
- • Pool or spa
- • Updated kitchen
- • Large backyard
- • Home office space
- • Garage or storage
Where to Search
- MLS listings: Your agent has access to the most up-to-date listings
- Online portals: Zillow, Realtor.com, Redfin (but verify with your agent)
- Open houses: Great way to see homes and get a feel for neighborhoods
- Agent network: Your agent may know about coming soon or off-market properties
Remember: In competitive markets like Orange County, homes can sell quickly. Be ready to act fast when you find the right property!
Step 5: Make an Offer
Your agent will help you craft a competitive offer that gets accepted.
Components of an Offer
- Purchase price: Your proposed price (may be above, at, or below asking)
- Earnest money deposit: Shows you're serious (typically 1-3% of purchase price)
- Contingencies: Conditions that must be met (inspection, appraisal, financing)
- Closing date: When you want to close (typically 30-45 days)
- Personal letter: Sometimes helps in competitive situations
Common Contingencies
Inspection Contingency
Allows you to back out or renegotiate if major issues are found
Appraisal Contingency
Protects you if the home appraises for less than your offer
Financing Contingency
Allows you to back out if you can't secure financing
Warning: In very competitive markets, some buyers waive contingencies to make their offer more attractive. This is risky - only do this with expert guidance.
Step 6: Home Inspection
A thorough inspection protects your investment and helps you make informed decisions.
What Inspectors Check
- Structural integrity (foundation, walls, roof)
- Electrical systems
- Plumbing and water systems
- HVAC (heating and cooling)
- Appliances
- Pest and termite issues
- Mold and water damage
- Safety hazards
After the Inspection
You have three options:
1. Accept as-is
Move forward with the purchase
2. Request repairs or credits
Ask seller to fix issues or provide credit at closing
3. Walk away
If issues are too significant (if you have inspection contingency)
Tip: Attend the inspection if possible. It's a great opportunity to learn about your future home and ask questions.
Step 7: Finalize Your Financing
Your lender will finalize your loan application and prepare for closing.
What Happens During Underwriting
- Lender verifies all your financial information
- Property appraisal is ordered and reviewed
- Title search is conducted
- Final approval is issued
What NOT to Do
- Don't make large purchases or open new credit
- Don't change jobs
- Don't move money between accounts without documentation
- Don't miss any payments
- Don't co-sign loans for others
Closing Costs to Expect
Typically 2-5% of the home price:
- Loan origination fees
- Title insurance
- Homeowner's insurance (first year)
- Property taxes (prorated)
- Recording fees
- Escrow fees
Step 8: Close on Your Home
The final step - you're almost a homeowner!
Before Closing Day
- Review your Closing Disclosure (CD) - compare to Loan Estimate
- Do a final walkthrough of the property
- Get certified funds for closing costs (cashier's check or wire transfer)
- Bring government-issued ID
- Review all documents beforehand if possible
On Closing Day
You'll sign many documents, including:
- Promissory note (your promise to repay the loan)
- Deed of trust or mortgage
- Closing disclosure
- Various affidavits and disclosures
Congratulations! Once all documents are signed and funds are transferred, you'll receive the keys to your new home!
Ready to Start Your Home Buying Journey?
Let our experienced team guide you through every step of the process.