When it comes to buying a home, there is one word that becomes more important than almost all others: CREDIT.
Unless you just cashed out your Google stock (and we’re an early hire), you’ll probably need to get a home loan in order to buy your first home in San Francisco. As a San Francisco first time home buyer, in order to get a mortgage with the lowest interest rate and the best terms, you’ll need to have CREDIT, and good credit at that!
Let’s say you have good credit*. You’ve done the right things, some of which may seem illogical…
Side note: For example, did you know that in order to have good credit, you need to actually have some debt (and pay it regularly and on-time)? Over the years, I have helped more than a few clients who thought that by staying credit card and debt-free, buying what they need in cash or with their debit card, that they were doing the financially responsible thing…and that their reward would be the so-called good credit of the debt-free. Think again. If you don’t have an unsecured credit card, go get one. You don’t have to use it regularly and certainly, this is not an invitation to go crazy shopping at Barneys. Think always, “What would Suze Orman do?” But, go get a credit card, use it, and then pay it monthly and on-time.
Back to the topic at hand.
You have good credit.
You’re employment is relatively stable.
You saved a down payment.
You are ready to buy your starter home in Bernal Heights or your designer condo in Mission Dolores.
You got preapproved for a great home loan through a local, reputable mortgage broker or banker.
You’ve chosen your SF Realtor.You went house-hunting.You made an offer.You are now in escrow.
Think you’re sliding into home (pun intended), don’t you?
Think again and do not, we repeat, do not do the following things when you are purchasing a home.**
- Avoid moving you money around from one account to another. If you need to move money, establish a complete paper trail of the money leaving one account and entering another.
- Any deposits of large money (including gift money from relatives) into any account need to be sourced by making a copy of the check and deposit receipt, or the wire transfer order.
- Avoid making a large purchase on credit or allowing your credit to be run, i.e. by a car dealership. Just wait to buy that Mini until AFTER the close of escrow.
- Do not close any credit card accounts or credit lines – call your mortgage broker before doing anything regarding your credit.
- Avoid changing jobs – especially if you are in escrow.
- Avoid extensive travel during your escrow period. (Although, in our experience, when you are buying or selling a home, especially in a jet-setter locale like San Francisco, one of the main characters (buyer or seller) will go out of town. Don’t fret. We can coordinate home purchases or sales from anywhere in the world. It’s real estate 3.0, yo.)
Of course, life goes on even when you are in escrow to purchase your first pad (Noe Valley condo, Soma loft, Bernal Heights house, Mission Dolores duplex, etc) so just keep your team (Realtor and Mortgage Broker) informed and don’t make any major financial decisions without letting us know.
* Don’t have good credit…yet. Here are some tips on how to build good credit so you can qualify for the best home loan rates and terms when you decide to buy a home in SF.
** At Zephyr Real Estate, we’re blessed to have the ongoing help of some of the most experienced, knowledgeable, and competent mortgage brokers in San Francisco. Our Guarantee Mortgage team of home loan specialists rock and you’ll be well-served to work with any of them. They help us stay informed and provided us with this list of what NOT to do when buying your first home in San Francisco.