Q. I currently reside in New York where I also work. I have plans to buy a home this year in the state of California; I will be a first time home owner. Is there a "perfect" time to buy? What should I pay special attention to? The best institution to have a mortgage with? what advice to you have for me? What are the pros and cons? -Aurette, NY
A. Aurette, the perfect time to buy is when you, and only you, are ‘perfectly’ ready to buy.
When you buy a home, you want to buy it right—solid, 30 year or 15 year fixed-rate mortgage with the lowest interest rate you can get and monthly payments that don’t exceed a third of your monthly income. In order to get the best mortgage these days, you need three old-school things that went a bit out of fashion over the past 10 years, the Three C’s: Great credit, the capacity to pay the loan (meaning solid income and savings) and collateral (a down payment).
Though many first-time home buyers put less than 20 percent down, know that if New York is your primary residence and this California home is either an investment property or to house someone else, you’ll definitely need that 20 percent down or even 30 percent, the norm for non-primary residences.
So, are you ‘perfectly’ ready? Also pay close attention to fees when you mortgage shop. As mortgage rates are so low these days, many lenders are tacking on larger fees to make up some of the difference. Stay away from subprime lenders—lenders who let you put very little down in return for a very high interest rate or funky adjustable rate. Stick with some of the big guys, banks that you know, or local community banks that you can walk into for service.
There are few ‘perfect’ times in our lives, but for a big money move like this, do your research and make it as close to well-done as possible.
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Carmen Wong Ulrich is the host of On The Money