How To Buy A New Home In California

The California real estate market presents diverse opportunities, with no shortage of new homes to tour and builders to buy from. These homes, which feature modern amenities, energy-efficient designs, and reduced maintenance, are an attractive option for anyone looking to move to the Golden State. However, it's crucial to understand the nuances of purchasing a newly built home, especially if it’s your first time buying one in the state of California. If that’s your goal, follow along to learn more about the process.

Where in the State Should I Live?

To begin, you’ll need to consider where in California you want to live. Start by understanding your lifestyle needs; think about whether you prefer the hustle of the big city, the calm of a suburban neighborhood, or the tranquility of rural hills and forests, and how close you need to be to your workplace, your or your children’s schools, and other amenities.

California is a massive state: according to U.S. Census data, 163,695 square miles. It’s an incredibly diverse region in terms of climate, with tropical, Mediterranean-style weather in the southern coastal region, a cooler interior, and a desert. Naturally, this influences the real estate markets of each region, and you’ll want to do some research on your desired location. Coastal regions like the San Francisco Bay Area and Los Angeles are known for their high prices, while inland areas like Sacramento and the Inland Empire offer comparatively affordable options. Also consider the local economic factors: job market conditions, school ratings, crime rates, etc. This article on the 10 most affordable cities in California can help you jump start your research.

How do I Budget for a New Home?

Saving money is a critical step towards homeownership. Start as early as you can: set up a savings account with regular contributions to build towards a down payment. Take advantage of down payment assistance programs, such as those offered by the California Housing Finance Agency (CalHFA). Take a look at your budget and see what you can keep and what you feel you can cut; even small savings here and there can help you immensely in the long run. Improving your credit score is important too, as a higher score can help you secure a better mortgage rate and lower interest. Reduce your credit card balances and avoid opening new accounts before applying for a mortgage; avoiding sources of debt as much as possible will help you keep your budget on track.

How to Find the Right Lender for You and Secure a Good Mortgage

Finding the right lender and locking down a mortgage is an extensive process: researching different lenders, exploring options from banks, credit unions, mortgage brokers, online lenders, and comparing their rates, terms, and fees all takes time, but it’ll be worth it. Understand your mortgage options by learning the differences between fixed-rate and adjustable-rate mortgages (ARMs), and familiarize yourself with FHA loans, VA loans, and conventional loans to determine which one is best for your financial situation. Getting pre-approved for a mortgage is also critical before you start house-hunting; getting pre-approved shows builders that you’re a serious buyer and financially capable of making your payments.

Finding Your Dream Home

Identifying new homes within your budget takes time and careful consideration. Establish your budget by calculating how much you can realistically afford based on your pre-approval amount and personal savings and remember to factor in additional costs such as property taxes, homeowners insurance, and potential maintenance expenses. Identify homes that fit your needs by prioritizing the features that are most important to you, such as square footage, layout, architectural style, and included amenities. NewHomeSource has listings for a number of different builders and locations all over the state.

Make Your Offer

Making your offer is a crucial stage in the home-buying process. Knowing the state of the market, whether it’s a buyer’s or seller’s market, will help give you some leverage in the discussion. Don’t hesitate to negotiate terms with the builder: ask about upgrades, warranty programs, and assistance with closing costs. Be prepared for multiple offers; in competitive markets, consider strategies like escalation clauses or offering a slightly higher price to make your offer stand out.

Close it Out

Navigating closing costs is part two to making an offer’s part one. Common closing costs include title insurance, escrow fees, home inspection fees, appraisal fees, and recording fees, which typically amount to 2-5% of the home’s purchase price. Carefully review the Closing Disclosure to understand what each of the fees are and make sure there are no discrepancies. For advice on closing costs in California specifically, this guide offers an in-depth look at what each cost is and what to expect from each one. Before closing, see that the home is inspected to make sure nothing is amiss.

Buying a newly built home in California, like anywhere else, involves careful planning, diligent research, and a thorough understanding of the process. By staying organized, patient, and informed, you can navigate Cali’s diverse market and plan for each step of the process. Stay focused and involved and you’ll be able to enjoy you new home and all its amenities in no time.

To learn more about newly built homes and living in California, visit newhomesource.com/learn.