Real Estate Agents
Choosing the right real estate agent is similar to forming a business partnership. It involves mutual trust and open communication. Buying a home can be a stressful experience; it’s usually the biggest purchase an individual ever makes. A well-trained, experienced and ethical professional who is looking out for your interests is a must. When looking for an agent, consider these qualities:

Mutual Trust: Talk to friends and neighbors to get recommendations based on their past experiences. If you are new to the area, get a recommendation by calling the local division of the Southland Regional Association of Realtors at 661/299-2930. Interview at least three local agents who are reputable and visible in the community.

Open Communication: You want someone you can talk to easily and freely, and someone who will help you from beginning to end in the process of shopping for a home. In a real estate market as hot as the Santa Clarita Valley’s, agents are extremely busy. Nevertheless, you should choose an agent who can spend time with you and who is accessible.

Professional Knowledge: During initial interviews, the agent should give you an idea of his or her education, knowledge, experience, sales philosophy and services. Years of experience in real estate sales can make a difference, but someone new to the field can also be more enthusiastic and work harder for the buyer. In the end, you should choose an agent with whom you feel most comfortable.

Assessing Your Needs
In determining what kind of house to buy, you should do your homework thoroughly to find the best possible location for you and your family. Remember: Location, location, location – although admittedly it’s hard to go wrong just about anywhere in the Santa Clarita Valley. You should consult with your agent about location and neighborhood, the size of the property, its style, and its proximity to schools, shopping and any other amenities you desire. You should make a list that prioritizes your preferred number of bedrooms and bathrooms, the size of the kitchen, and amenities such as a swimming pool or patio for entertaining. It’s a good idea to formulate this wish list before setting foot in any prospective home; you need to know precisely what you want and where.

Computing your Affordability/Debt
How much house can you afford?
You must compute your income: What is your estimated gross (pre-tax) income per month? (Include salary, commissions, bonuses and child support.)

Then, calculate your monthly debt: What is the minimum you are required by your creditors to pay each month for credit cards, loans and other financial commitments?

How much cash do you have for a down payment and closing fees? Include cash from checking and savings accounts, proceeds from the sale of any current home and gift money.

Securing Mortgage Pre-approval
Having a pre-approved loan certificate in hand is a powerful negotiating tool when it comes time to make an offer on a home. The key is pre-approval, not just pre-qualifying, which anyone can obtain easily over the telephone in five minutes. Most real estate agents want prospective buyers to have a pre-approved loan before they will show them any properties.

It creates a healthier situation if you have gone through the actions of getting pre-approval to show you have the credit and the money. It makes the negotiation and transaction move forward quicker, as a pre-approval is just as good as cash to the seller.

Your first step in buying a home is to visit a reputable lender’s office to apply for a mortgage and get pre-approval for financing. Second, talk to a loan officer who will give you a rational sense of what you truly can afford. Your real estate agent most likely has a relationship with a preferred lender, so it usually doesn’t hurt to see what he or she can offer, as well.

To qualify for that loan, lenders will need documented proof of everything relating to your finances: generally two years of employment history, two months of pay stubs from your current employer, or verification from the employer; a record of expenses; credit history from at least two credit bureaus; bank account statements, and tax records.

Choosing the right mortgage can be daunting, as just about every flavor is available. Lenders offer all types of loans to suit every taste, budget and financial situation — from FHA to VA and HUD to conventional mortgages.

The four features of any mortgage are amortization (the schedule at which principal is repaid), monthly payment, interest rate, and length of the loan. The most common mortgage has a fixed interest rate and term, but alternative mortgages permit the term and interest rate to vary. The most common type of alternative financing is the adjustable-rate mortgage, which starts low and periodically adjusts up or down depending upon market conditions.

Making an Offer
Once you have found your dream home, you and your agent will prepare the necessary contract between you and the seller of the property. You will be expected to offer “earnest money” with the offer to be presented to the seller. The payment ranges from $1,000 to a percentage of the price of the home.

The contract will spell out any contingencies you desire, such as interest rate, move-in date and repairs that must be completed to the home before the transaction closes.

The Inspection
A professional inspection of the property you are buying is a must. It helps you to avoid falling victim to any unwanted and costly surprises down the road. The inspection should be all-inclusive – from the heating/air conditioning system to the plumbing. One trait of a good home inspector is a willingness to get a little dirty exploring some of the hard-to-reach areas of a home. The cost of a home inspection generally ranges from $100 to $500.

By law, the seller must disclose any defects in the property. In addition, any defect an inspector finds must be repaired by the seller up to the price agreed to in the purchase contract.

Insurance & Taxes
Homeowner’s insurance is required when you move into a home. Choosing a reputable insurance agent and deciding on the necessary coverage is the buyer’s responsibility. Ask yourself what level of liability you need to cover accidents and any damage caused by fires, earthquakes and floods. Is the roof covered with shingles or tiles? That’s an important question in fire-prone areas such as the Santa Clarita Valley, where many older homes were built with wood-shake shingle roofs. Also, keep in mind that some insurers will not cover your property if it falls within a designated fire zone. Investigate this before making your offer. Your agent should help you with advice and recommendations, as well as explain the taxes that you as a homeowner will need to pay. Common assessments are property taxes at both the state and local levels, plus taxes levied by school districts. Some home developments fall within specially designated Mello-Roos tax districts, which assess you for certain infrastructure enhancements within the development. And, some neighborhoods also fall within landscape-maintenance districts, in which all homeowners pay taxes to maintain common areas.

There are also certain tax exemptions available to homeowners who qualify for specific programs. One exemption is the Homeowners Property Tax Exemption, which allows up to a maximum of $7,000 of assessed value to an eligible owner of a property that he or she occupies as a principal residence. Information is available by mail: Homeowners Property Tax Exemption, County of Los Angeles, 500 W. Temple St., Los Angeles, CA 90012-2770. If you are 65 or older, or are a disabled veteran, you may qualify for other exemptions.

Although not a tax, you should also determine whether your prospective new home belongs to a homeowners association that levies monthly fees. Make sure you investigate the level of all taxes, assessments and fees before you make a purchase commitment.

Financing Terms
Understanding the lingo of real estate financing will help you comprehend any loan package offered by your lender:

Points: Costs assessed at closing by the lender that equal 1 percent of the loan and lowers the interest rate you pay, which means lower monthly payments. In time, lower monthly payments pay for the cost of the points, but if you sell the house in a couple of years, you lose the savings. In that case you would be better off paying the higher interest rate.

Adjustable Rate Mortgage (ARM) or a balloon (2-step) mortgage: An ARM program initially offers an interest rate lower than fixed-rate loans, but once this specific time expires the interest rate will be adjusted, based on a selected economic index like the one-year T-bill. This process repeats itself throughout the life of the loan.

Balloon Loans: This reduced-interest rate program allows you to make fixed payment loans for a period of 5 to 7 years before the balloon payment becomes due. The loan is amortized much like a 30-year fixed-rate program. At the end of the term, the balance is either paid in full or the buyer must refinance.

Home Improvement
As you might imagine in a community undergoing such frenzied residential growth, the home-improvement industry is a bustling one in the Santa Clarita Valley. At last count there were two Home Depot outlets, a Lowe’s, an OSH and a Do-It Center for the do-it-yourselfers, as well as a vast multitude of smaller specialty stores geared toward making your abode a dream home. Turn to the Home Improvement chapter for some ideas on sprucing up your new place.

A wide variety of service companies also offer everything from pool and spa construction to professional landscaping and maintenance.

You can read more about ways to spruce up your home in the “Home Improvement” chapter.