10 tips to help steer first-timers into a house

Inexperienced buyers advised to do their homework before signing deal

Carlos Jijon works to move things out of the garage of his house in Buena Park, Calif. Mr. Jijon and his wife had to navigate a market with tight inventory and investors armed with cash.
Carlos Jijon works to move things out of the garage of his house in Buena Park, Calif. Mr. Jijon and his wife had to navigate a market with tight inventory and investors armed with cash.

BUENA PARK, Calif. — With two daughters and a baby on the way, Carlos and Cinthya Jijon decided last year to buy a house for about the same monthly cost as a bigger apartment. But they couldn’t find a house.

Supply was tight. And investors armed with fistfuls of cash outbid them every time.

But now the Jijons are unpacking, settling into a one-story house in Buena Park, Calif. The auto parts deliveryman and the nurse made the transition from renters to first-time homebuyers.

The market is tough for first-timers such as the Jijons.

Statistics show that number of first-time buyers is falling. But the Jijons persevered, taking an eight-hour homebuying course, learning about cash-assistance programs, and getting loads of practical advice.

With the spring homebuying season starting, here are 10 tips for first-time homebuyers:

1. Determine what you can afford. Meet with a lender, review your finances, and find out how much you can afford to spend on a home and how much you have for your down payment.

“If they only qualify for a $300,000 house, they shouldn’t be wasting their time looking at a $500,000 house,” said Maritza Reyna, education manager for the Consumer Credit Counseling Service of Orange County, Calif.

Experts warn also not to shop for the most expensive home you qualify for, unless you truly can live with the payment that comes with it.

2. Take a class, read a book. Carolyn Warren, former loan processor and author, warns first-time buyers not to blab to an agent that they really need his or her guidance. It’s like wearing a sign: “Charge me more.”

“You’re saying to them upfront, I don’t know what I’m doing. I’m uneducated,” said Ms. Warren, author of Homebuyer Beware and another book on mortgage rip-offs.

3. Shop for a mortgage. Do some independent shopping.

Don’t call 10 lenders and ask for their interest rates. A lender can’t be held to those quotes, so “it’s just going to lead you to the smoothest-talking liar,” Ms. Warren said.

Instead, look up mortgage rates online, then call three or four lenders and mortgage brokers and ask them for a written list showing their fees.

“The lowest rate is no good if you’re paying too much in fees,” she said.

4. Check for down-payment assistance. “Don’t assume your income is too high,” said Karla Lopez del Rio of NeighborWorks Orange County, a housing assistance agency approved by the Department of Housing and Urban Development. “These special programs, no one’s going to tell you about it if you don’t seek it out.”

5. Get preapproved. Getting a lender to preapprove a loan before you shop can make your offers more attractive while avoiding deals falling apart because loans don’t get approved during escrow.

Find out what documents you’ll need and get them — W2s, tax returns, pay stubs, bank statements.

Go to AnnualCreditReport.com to get your free credit reports from all three major credit agencies. Experts recommend you contact TransUnion, Equifax, or Experian and pay $8 to $10 to get your credit score as well.

6. Pick an agent who’s right for you. Get referrals for agents from friends and family, then talk to each one. Look for someone with whom you can communicate.

“Keep in mind that they work for you,” said Ms. Reyna, the education manager for the Consumer Credit Counseling Service.

Jay O’Brien, part owner of a new Re/​Max Prestige office in Costa Mesa, Calif., warns buyers against letting a home’s listing agent also represent them. Though legal, the situation raises the question of how well the agent can represent the competing interests, he said.

And sometimes agents are willing to lower their commission to help make a deal happen.

7. Find a home you can afford. Real estate columnist Ilyce Glink suggests making a wish list of where you want to live and what you want to have in your home.

But don’t fall so in love with a house that you don’t see its flaws, experts say. Move on if the asking price is unrealistic, the seller is unreasonable, or if the bidding rises beyond your budget.

8. Scope out the neighborhood. You can get crime reports from local police departments or their Web sites. Then walk and drive the neighborhood at different times of the day and days of the week.

Talk to the neighbors. That’s the only way to learn about the incessantly barking dog or noisy trains.

9. Make a realistic offer. Mr. Ortola advises first-time buyers to find out what comparable homes sold for, learn the true value of the property, and make a realistic offer. A good agent will be honest if your offer is too low.

10. Find a good home inspector. Get referrals from family and friends to make sure you find someone who isn’t trying to help the agent, close the deal.