Buying a home is a significant financial decision, and the California Department of Real Estate (DRE) has issued guidance for prospective buyers as the summer market heats up.
The DRE advises individuals to carefully consider their long-term plans before starting their search. Prospective buyers are encouraged to assess whether they intend to stay in the home for at least five years and if the property will meet future needs, such as accommodating a growing family or supporting remote work. The type of house—single-family, condo, duplex, move-in ready, or fixer-upper—should align with these needs.
Location is another important factor. Buyers should evaluate neighborhoods based on distance to work or school, safety, amenities, schools, and potential future development. They should also research local housing inventory trends and how long homes typically remain on the market in areas of interest.
Creating a list of “must-haves” and “nice-to-haves” can help focus the search process. The DRE suggests speaking with friends or family who have recently purchased homes for additional insight.
Financial readiness is crucial. The total cost of buying a home goes beyond monthly mortgage payments; it includes down payment, closing costs, insurance, taxes, repairs, upgrades (such as energy efficiency improvements), fire hardening measures, drought-tolerant landscaping, utilities, homeowner association dues (HOA), renovations, and ongoing maintenance.
According to the DRE: “Typically, you’ll need 5 percent to 20 percent of the purchase price for a down payment, depending on your financing arrangements, and an additional 3 percent to 7 percent for closing costs. Please note: if you put less than 20 percent down for a downpayment, you may be required to have an impound account and/or pay private mortgage insurance (PMI).”
Buyers are urged not to focus solely on the maximum loan amount they qualify for but rather on what they can realistically afford each month after accounting for all expenses. Overextending financially increases foreclosure risk if circumstances change.
Comparing lender rates and fees is recommended. Getting pre-approved can streamline the buying process since lenders review credit history and debt-to-income ratio when determining loan eligibility. Some lenders offer special rates or programs for first-time buyers.
The DRE reminds consumers: “Make sure you understand the loan’s interest rate, terms of the loan, and monthly payment for principal and interest.”
Understanding different types of mortgages is important. Fixed-rate mortgages maintain consistent interest over 15 or 30 years; adjustable-rate mortgages start lower but fluctuate with market conditions over time.
When selecting a real estate agent or broker licensed by DRE (which can be verified online or by calling 877-373-4542), buyers should remember that this is a business relationship focused on protecting their interests.
During home tours and negotiations, it’s essential to keep priorities in mind and ensure full understanding of any HOA dues or special assessments—including those related to solar systems already installed on properties.
The DRE concludes: “Buying a home is both an emotional and financial decision… Take your time to weigh the pros and cons of each listing you tour before making a decision.”
More information about homebuying tips can be found on the DRE website.
