This week, we at That Portland Life sat down with Larry Wisher from Caliber Home Loans to record a Facebook Live First-time Homebuyers Class and it was a great success! Don’t worry if you missed out, watch the video below! If you would prefer to read, rather than watch, I will summarize what we talked about below!
Larry from Caliber Home Loans was born and raised in Portland and started in the mortgage industry in 1992, so has seen quite a bit! He joined to to answer questions from the financial side of things.
To start with, Jessica and I ran through the step-by-step process of buying a home.
The very first thing that you want to do in purchasing a home is to meet with a lender and meet with a Realtor! With them, you will got through how much of a house you can afford, what basic criteria you are looking for in your home, and what your timeline looks like to move in.
Once you have assembled your Realtor and lender dream team, it’s time for us to start looking at homes! The most important thing to remember during this step is that there is no right number of homes to look at. Some people will fall in love with the very first house they walk into, while others may need to take a much longer time to decide.
Next, when we have found your dream home, we are going to write an offer! We will go through the contract together and talk about all of the biggest negotiating points: price, closing date, possession date, and concessions that you would like to ask for. Once we submit the offer, we will negotiate on your behalf with the sellers to come to an agreement. Sometimes, it takes one try, and sometimes it can take 3 or 4 to come to an agreement that is acceptable to all parties. Now you’re pending on your first home!!
The next thing we will do is order inspections. Since every home is different the inspections that we will order are also going to be different. Generally speaking, we will want to have a whole home inspection, a sewer scope, and often a radon test. However, if you fall in love with a more rural home, we also might need to have a well water test. Sometimes we have to search for a decommissioned oil tank or have a structural study done of the home. We will always recommend what we think is going to be best for you in regards to your future home. You will usually want to budget around $1000 for the basic inspections, and we can discuss any further inspection add-ons from there.
The inspection period usually lasts around 2 weeks, so we will have those two weeks to have all of the inspections done and to negotiate repairs. Once we get the inspection reports
back we will go through everything with you, to talk about what repairs we would like to request. An important thing to remember in this step is that we can’t ask for upgrades. So, if there is an older water heater that still works perfectly well, that wouldn’t be a request we would make. However, if for example, there is a hole in the roof, we would ask for that to be repaired or replaced. We will go through the whole thing with you and help you determine what issues are big and important and which ones might be items that can be taken care of easily and cheaply after closing.
Once all of the repairs have been negotiated, the next major step is the appraisal. This is when your lender will send someone out to the house to make sure that it is worth what you are paying for it. Most of the time, the appraisal is going to come back at value. On occasion, the appraisal will come back a little low however, in which case we will need to do some further negotiations. We might need to renegotiate the offer price, bring more funds to the transaction, or potentially walk away altogether if that is the right move for you. Again, we will discuss all of these options in detail if the necessity were to arise.
Finally, the last big step is to sign all of the closing documents! You will already know what funds you need to bring to closing, because your lender will have sent that all over to you in advance so that there are no surprises. We will sit down with your escrow officer and sign lots and lots of fun paperwork, including the deed to your new home. Once everything is signed, they go back to your loan officer to release the loan funds and then we get to record with the city. Then, we will meet you at the house at the possession time that we specified in the contract to deliver you the keys to your new home!!
It can sound like a lot, but that’s what we are here for- to walk you through everything step- by-step and make the whole process as easy on you as possible! If you ever want to sit down and talk through this process more, feel free to reach out and we would be happy to meet with you.
We did receive some questions! The first one was, ‘Should I rent or should I buy?’
This was a great question. The answer really depends on your specific circumstances, but Larry weighed in for us from a standpoint of investment and equity. He made the great point that when you are renting, you are basically just paying the mortgage for your landlord, but without getting any other benefits such as tax advantages, or the ability to depreciate the property over time. In addition, when you buy a home you get to rely on the appreciation of the home. In the Portland metro area, we have been very fortunate to see consistent appreciation in home values, so buying a home is basically a financial investment that you can live in!
Our next question was, ‘What is the market doing right now?’
The answer to this can be pretty area specific, but in general we are still seeing homes sell pretty quickly, many homes are still getting multiple offers, especially in the under $500k range. Things aren’t selling quite as fast as they were this time last year, so we seem to be heading towards a more balanced market. Something to remember though, is that while many people to try to ‘time the market’, it really is best to just buy when the time is right for you.
The next question we received was, ‘Do I make enough money to buy a house and what would I need to have for a downpayment?’
Larry said that the first question he asks homebuyers is how much is the maximum monthly house payment that you can afford. So, if you are paying $1500 a month in rent, and that’s the max you can pay, that’s the answer. Then he will ask you about your fund availability for a down payment. There are programs available that let you accept gift funds for your down payment or borrow from a 401k if need be, so those are all things that Larry can discuss with you when deciding how much to put down and where the funds will come from. He also let us know that there are some programs in the City of Portland that will let you put as little as $1000 down!!
Next, a very common question, ‘Portland seems really expensive right now. What surrounding areas might be a good fit if I want a little more house for my money?’
We get this question a lot! While Central Portland has continued to strongly appreciate over time, there are still many affordable areas. The further out from the city center that you get, the more affordable the area tends to be. The outer east side of the city is generally more affordable than the suburbs on the west side of the river, but also, places like Gresham, Canby, Scappoose, and Vancouver are still quite affordable for first-time home buyers.
Thanks again to all who joined, and definitely reach out if you want to chat through your own home ownership goals over a cup of coffee or a glass of wine. We are here to help!