Helping You Have a Successful Napa Valley / Sonoma County Home Buying Experience
At the Stornetta Team, we strive to provide the highest quality of service for our clients. We will work to help you better understand the complexities of the Napa and Sonoma County real estate markets, the differences among the communities, and the various property types available. We will represent you, the buyer, throughout the home shopping and transaction process. Our experienced, professional and knowledgeable Realtors® will help you obtain the best price and terms for the Napa or Sonoma County home of your choice and put your best interests first at all times. We promise to provide you with confidentiality, loyalty, and full disclosure.
Napa Valley / Sonoma County Home Buyer's Guide
Whether you are buying a home in the Napa Valley or in Sonoma County, the home buying process can be intimidating and difficult. In addition to wanting to buy the best home possible for you and your family, you may be worried about the financial aspect or may be confused about the different steps involved. To help you better understand the complexities of the home buying process, we are providing your with the following home buyer's guide, which should answer many of the questions you may have. As always, you're welcome to contact us @ (707) 815-8749 for help, or to schedule a private showing of any Napa or Sonoma County home.
Before you begin your search for a Napa Valley or Sonoma County home, you need to consider the following:
- Determine Your Buying Objectives. Why do you want to buy a home? Need more room? Downsizing? Tired of paying a monthly rent for nothing in return?
- Determine Your Needs. Prioritize what is most important to you in a home (style of home, size of home, neighborhood, schools, cost, etc.) Keep in mind, there is a difference between what you need and what you want, so be realistic.
Determine What You Can Afford
The first thing you need to decide is how much you can afford. Determining this early in the buying process will save you a lot of time and frustration. Not only will you have a clearer idea of the amount you can spend, but you can also eliminate all those homes that are not in your range. You may even find that being pre-approved opens the doors to a home you hadn't considered before.
Contact a credit bureau and get a credit report on yourself, just to make sure your report is accurate. If you don't like what you see, it's time to try to clean up any problem items or clear up any mistakes. You may also want to consider contacting a consumer credit counselor for help.
It also pays to get pre-approved for a mortgage early in the process. Some think pre-qualifying for a loan is enough, but it's not. Pre-qualification is a guesstimate, while a pre-approval means that the lender has verified your financial information and has actually committed money in your name for a specific loan type and amount. Pre-approval not only lets you know in advance how much you can afford to spend, but it also makes your offer to buy more credible to the sellers, which gives you more power when it’s time to make an offer on a Napa Valley or Sonoma County home you choose.
When choosing a mortgage, find out about:
- The down payment that is required
- Both the interest rate and the annual percentage rate (APR)
- Standard closing costs (and any extra fee the lender may charge and why)
- The possibility that your mortgage will be resold on the secondary market
There are many different types of loans available:
Bridge Loan Should you sell your home first before buying a new one or buy first and then sell? Most people need the equity in their current home to purchase a new one. But what if you sell first and don't have anywhere to go? A bridge loan may be an option. A bridge loan is a temporary loan that you obtain from your lender until the permanent one can be put in place. Once the primary mortgage is in place, the bridge loan is paid off and closed out. But understand that while waiting for a closing on your home, you will be making two mortgage payments. You will owe your present mortgage payment plus the payment on the bridge loan. Be certain you can afford it.
Conventional Mortgages A conventional mortgage offers a fixed rate. They typically come in 10, 15 or 30-year loans. Although conventional loans used to require 20% down, most people today put 10% down (68% of buyers today put less than 20% down). Just keep in mind, if you put less than 20% down, you'll be asked to carry private mortgage insurance (PMI). If you're a first-time homebuyer, there are many low down payment loans available that ask for 3-10% down.
Adjustable Rate Mortgages Adjustable rate mortgages carry an interest rate that changes to keep pace with current market rates. This may be a good idea for buyers planning to stay in their home for a short time. If you plan to stay in the home for an extended period of time, you're better of locking in a fixed rate with a conventional loan.
FHA Mortgages Loans through The Federal Housing Administration (FHA) help low-to-moderate income home buyers purchase homes with low down payments (approximately 3%). You can use a gift or unsecured loan for the down payment and closing costs. Also, these loans are usually assumable (along with the current interest rate) by the next qualified home owner when you sell your home, which is an added benefit when it comes time to sell.
VA Mortgages Veteran Affairs loans are great because they provide the opportunity to buy a home with no down payment. They are offered up to a predetermined loan amount (not more than $200,000) and are assumable by qualified buyers. To qualify for a VA loan, the veteran must be on active duty or have a discharge (other than dishonorable), along with one of the following:
- 180 days active (not reserve) duty between September 16, 1940 and September 7, 1980
- 90 days service during a war (Korean, Vietnam, Persian Gulf, etc.)
- Six years service in the National Guard
Assumable Mortgages An assumable mortgage is a loan that stays with the property. It is simply transferred to the qualified home buyer. This means considerable savings for the next buyer. It may include no points, no interest rate change and low closing costs. Assumable mortgages are often the most valuable part of a property. FHA loans given before December 1, 1986 and VA loans given before March 1,1988 are completely assumable to the qualified buyer. This means that you can take the loan along with the real estate, just as it stands.
Balloon Mortgages The Balloon Mortgage has a fixed rate for a certain time frame, typically seven years, followed by a "balloon" payment requiring repayment of the entire home loan balance. Interest rates are generally lower than conventional loans. People may choose this type of loan because they plan on either selling the home, paying it off, or refinancing before the balloon payment is due.
Private Mortgage Insurance
If you put less than 20% down on a loan, you will likely have to pay PMI or Private Mortgage Insurance. PMI protects the lender against a loss in the event of default by the borrower. You can ask your mortgage company to remove the PMI if you've paid 20% of the loan. However, you will be asked to provide an appraisal.
Real Estate Taxes and Home Owners Insurance
Most lenders require you pay real estate taxes and insurance on a monthly basis. This cost is included in your monthly mortgage payment, placed in an escrow account, and paid out by your mortgage company.
The best way to ensure you Napa Valley or Sonoma County home you are about to buy will be problem free is to hire a professional home inspector. The home inspector will write up an inspection report with all minor and major defects itemized. Good inspectors will find minor flaws in nearly any home. It's up to you to decide how important they are. It is also helpful to be present during the inspection. Inspectors often provide you tips on the maintenance and upkeep of the home and its systems.
It's also highly recommended that you purchase a home warranty. This will cover the repair or replacement costs in case items such as appliances break down after you purchase the home. The peace of mind is worth the expense.
Lenders require appraisals to confirm that the home for which they're providing you a loan is in fact worth the amount you're paying. Appraisers are independent agents normally hired by the lender, however you may have a choice. The fees appraisers charge vary and are typically built into your loan costs. Your lender may also require a Location Survey that certifies the house is within the boundaries of the lot. The lender often selects the surveyor, but again, you may have a choice. The lender usually pays for the cost of an appraisal. Then it's factored into the buyer's closing cost.
When you buy a Napa Valley or Sonoma County home, a title company examines the chain of titles (previous owners) to insure that there are no problems with obtaining clear title to the property. Parties other than the current owner of the home may have rights to it for things such as mortgages, liens due to unpaid taxes, lien claims to those who the owner owes money, etc. As a new owner, you may know nothing about these risks, but you are still vulnerable to such claims on your property. A deed is not sufficient protection. That's why title insurance is necessary.
If you are not assuming the seller's homeowner's policy, you will need to buy your own. Title will not be transferred until you can prove you have the home covered by insurance. This protects you for things such as fire, flood, tornados, or any other damage to the home. You may also consider additional levels of insurance to cover natural disasters that are more prevalent in your area.
Escrow and Closing
The escrow agent conducts the closing and is often affiliated with the title insurance company. Their job is to ensure the buyer obtains a clean title, the lender obtains a good mortgage, that the costs of the transaction are paid, that the seller's mortgage is paid off, and that the seller receives their proceeds.
The escrow agent prepares a closing statement that outlines what the required funds are, who's paying and where the funds are going toward They will not disburse funds until they can guarantee that the above noted items have been taken care of.
The Napa Valley or Sonoma County title/escrow company you are using will tell you how much you need to bring to closing. Personal checks are not accepted, so bring a cashier's check.
Need Help Finding Your Dream Napa Valley / Sonoma County Home?
To learn more about the home buying process or to schedule a private showing of any home found on our website, simply fill out the form below, click submit, or call us today @ (707) 815-8749. We appreciate your stopping by and look forward to speaking with you!
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www.WineCountry-Real Estate.com is owned by Mark Stornetta, who is a licensed REALTOR® of Alain Pinel Realtors, 552 Broadway, Sonoma, CA 95476. (707) 815-8749, DRE #01440416. Alain Pinel Realtors is licensed in the state of California, is an Equal Opportunity Employer and supports the Fair Housing Act. Information deemed reliable but not guaranteed.
Sonoma County Real Estate / Napa Valley Real Estate. Homes, Realty, Land & Vineyards for Sale in Glen Ellen, Healdsburg, Kenwood, Napa, Petaluma, Santa Rosa, CA, California.