Home Loans California & Arizona

When looking to buy a house in California consider this questions at the beginning of the home buying process. Looking to time the market when it comes values and rates is not a good idea. Waiting for both values and rates to come down will only frustrate you in the process of the home buying process.



Consider these questions when purchasing property in California.
  • What is my monthly budget I can afford in terms of a house payment
  • How much money do I need for the down payment, closing cost and upfront fees
  • Where do I want to buy in terms of location
  • Will this be a long term purchase or a short term investment 
  • Do I explore a fix or an adjustable interest rate
  • When I am ready to sell can I resell as easily as I purchased the property
  • What kind of property do I buy a house, duplex, Condo or a Townhouse
  • Do I want to buy house in an area that has a high property tax rate or HOA
These are just some of the questions you need to ask yourself when starting the process of your home buying process. These will be a factor at the very beginning that will determine your decision of owning a home here in California.

The most important step before making an offer on a house is to, get yourself pre-approved to buy a home. This will determine if you have to work on your income, credit or the down payment to be able to begin your house hunt. This process will ensure your loan is in place letting the sellers know you are ready to move forward with the process once your offer is excepted. 

Let's explore each of the 8 important factors when starting your home search that will determine when, how, what and where you buy.

What is my monthly budget I can afford in terms of a house payment:
If you are paying rent at the moment, then you know what your budget will allow for a house payment. You can adjust that budget up or down depending on other monthly debts you have such as auto, student, utilities, credit card debt, etc.

If you are a first time home buyer and living with family or friends, budget around 33% of your monthly income towards a house payment. Starting off with any kind of a higher monthly debt may be a shock because you are not used to it.

In both cases, sit with a loan officer, such as myself to review your income, where we can present you with options on payment. The payment will determine what the purchase amount will be based on what you are looking to put down on the house.

How much money do I need for the down payment, closing cost and upfront fees:
There are home loan programs that require no money for the down payment and others that require as little as 3% to 3.50% down of the sales price. Also, there will be fees involved when buying a house, such as lender, escrow, title and buyer['s pre-paid fees, as well as upfront out of pocket expenses. Click HERE to learn more about the fees in buying a house in California.

The funds to purchase a home can come from the buyer's own sourced funds, gift from a family member, the seller can contribute towards the cost as well or from a down payment assistance home loan program. There are ways to locate and source funds to buy a house, we will need to explore all available avenues to ensure there are funds to close escrow.

Where do I want to buy in terms of location:
You always here from industry professionals, Location-Location-Location. This is very true when starting your home search. This will come into play with job location, family friends, work, school, parks, hospitals, shopping and I think the biggest factor, resell. If this is not your permit residence where you will retire in, then think about resell.

Location is a key factor for every homebuyer, everyone wants to live in a good area and the houses for sell in those areas will be at premium, good when you buy and great when are ready to sell. You may not be able to budget for the good area, but owning property to sell or rent later is always a good investment because values will always go up and down (more up than down) and you will be paying the mortgage down, thus increasing the equity of the house for future sell-ability.

Location of the property can bring additional monthly fees such as HOA, higher property taxes and possibly flood insurance. This is something to consider as well.

Will this be a long term purchase or a short term investment:
Looking at a property for retirement or possibility renting one day is a good long term investment for additional income for renting or having the property paid off when ready o retire. 

Short term can be your first home before starting a family, job re-location or starting your real estate empire to buy and flip. 

Try and have a goal on the length of owing a house because this will determine the kind of financing and down payment you start with. I know we can not predict the future, but start the path towards homeownership because this history has the biggest return on investment. Yes there are ups and downs in real estate, but investing in safe real estate returns more than the stock market. You have to live somewhere and that somewhere should be something you own.

Do I explore a fix or an adjustable interest rate:
I believe in fix interest rates over an adjustable rate, rather you are looking for a short or long term investment, fix rates are the way to go. You can obtain (need to qualify) a shorter fix term with a 10, 15, 20, 25 year. Knowing what your monthly mortgage payment will be is less stress then having an adjustable rate.

The adjustable is also good if you know how to manage it and you know for sure that buying the property will be a short term investment. These are for seasoned homebuyers knowing the risk with adjustable rate mortgages.

Even though the adjustable rates are lower, I like the fix rates knowing that the principle and interest payment will remain the same throughout the term of the loan. Even adding more to the payment will be applied to the principle balance thus paying the loan off earlier and saving on the interest part of the balance. 

When I am ready to sell can I resell as easily as I purchased the property:
If the property is easy to find financing on than you should be ale to sell to another qualified buyer just as easy. Location of the property can also play a factor in re-selling, such as, each county will have loan and income limits when financing with traditional loan programs available through FHA, VA, USDA and Conforming.

Location can determine how you will be financing the purchase of the property. Is the property in an area that will limit traditional financing because of the county loan limit? This will hold home prices down because the vast majority of buyers may not have the means to buy a house over the county loan limit.

Also, look what is around the neighborhood, like what kind of commercial buildings are around or may be going up in the future, will there be additional growth in the area that will cause more traffic, etc.   

What kind of property do I buy a house, duplex, Condo or a Townhouse:
Property type will play a big factor in determining what to buy. Single family detached homes will be the easiest to finance as long as the property is lending and meets health, safety, soundness and security issues which goes for all property types. 

With a duplex purchase you may need to come in with more of a down payment which will be determined by what home loan program you decide to move forward with.

Condos with respect to the other 4 property types is the hardest to find financing because, not just the unit itself needs to be lending so does the whole entire complex. So you have a hard time finding financing for a condo purchase,t hen when you are ready to sell, the next buyer may have a difficult time as well. Not saying this can not be done, it certainly can, just may push you to a different home loan program to close the purchase.

A free standing detached Townhouse will be a great starter or retirement home because the maintenance of the exterior is handled by a property management company and this type of property is also easy to finance when detached.

Think about the property type as a factor when starting your home search, because this may push you towards a particular loan program over another.      

Do I want to buy house in an area that has a high property tax rate or HOA:
Looking in a new area may bring a higher property tax rate than an older area here in California and the reason is the additional Mello-Roos tax. With the added property tax fee and/or monthly HOA can adjust your budget to purchase a lower priced property.

Buying a property zoned as a PUD (Planned Unit Development), Condo or Townhouse will add the monthly HOA to the qualify factor in terms of payment and debt to income ratios.

Purchasing a new home verses an older may carry those additional higher property taxes that also will factored in the monthly mortgage payment and qualifying debt to income ratio which will adjust you buying power. 

So before making an offer on a property, let's explore these 8 factors before beginning your home search. Start your home buying process off on the right foot by falling these important steps HERE when qualify for a home loan. I welcome the opportunity to assist with your home buying process. Please call me direct at 909-503-5600 or email me at Nathan@NathanRufty.com. I look forward in hearing or meeting with you and discussing your goals of buying a house in California.
Posted by Nathan Rufty on December 12th, 2015 11:28 AM

Buying a House in California and the cost of doing so. Buying a California house can be very affordable with the down payment and closing cost.


Let's explore the 3 main areas on the cost of buying a house in California. Those 3 areas are; the down payment, the up front out of pocket cost and the closing cost. The funds to buy a house can come from a checking, savings, stocks, bonds, IRA, retirement account, 401K, Life Insurance policy, Gift from a family member,
down payment assistance home loan program, employer loan, sell something of value (need to document the sell with a proper paper trail), as you can see there are many avenues to obtain funds to purchase a property in California.

The first area that we need to cover when buying a house in California is the Down Payment. There are home loan programs that offer no money down such as the VA home loan program and the USDA home loan program which are available in the state of California.

Other purchase home loan programs will require at least 3% on the Conventional first time home buyer program. FHA purchase home loan program requires a 3.5% down payment of the purchase amount, example, purchase amount of $300,000 at 3.5% will require $10,500 for the down payment and those funds can come for any of the sources mentioned above. If you have budgeted for a larger down payment, that is always welcomed, more down payment will reduce your monthly mortgage payment and with enough down payment, mortgage insurance will not be included in the monthly mortgage payment.

The earnest money deposit also known as the EMD that is used to open escrow will count towards the cost of the loan. You will need to discuss the amount of the funds to open escrow with your real estate agent. The more money you open with, shows the seller you are a serious buyer. 

The second area is the up front out of pocket cost when buying a house in California. These cost will included the earnest money deposit, the credit report fee, the appraisal report fee and property inspection reports such as (these are not required but recommend), home inspection report and a termite report (a termite report is required on VA purchase home loans in California). Other inspections if elected by the buyer to pay for can include a roof, foundation, mold, well and septic reports. The cost for each inspection will range from vendor to vendor.

These inspections on non-refunded, these are paid to third party vendors. The seller, real estate agent and lender do not have control over the outcome of these reports, once the inspection is complete and report is delivered to the buyer(s), the fee is non-refunded.

The third area is the cost of buying a house in California are the closing cost. The closing cost will consist of four areas; lender fees, escrow fees, title fees and the buyer's pre-paid fees. The lender fees will include but not limited to the processing fee, underwriting fee, flood certification and additional credit report fees if supplements are needed.

Escrow and title fees are other cost associated with buying a house. These fees are paid for at the time of closing and will differ from vendor to vendor. Escrow will be the service provider to receive and distrust funds to all the appropriate parties. Title will ensure your property you are buying is clear from any and all liens at the time of closing and they are the service provider that will record the new Deed of Trust with the local county recorder's office.

The last set of fees will be the buyer's prepaid items such as per diem of interest, home owners insurance for one year, impound account of the property taxes and homeowner's insurance. The fees will vary based on the property type, purchase amount and loan amount. Note: The Conventional purchase home loan program with 10% or more on the down payment does not require the buyer(s) to have an impound account. 

Even though there are down payment assistance home loan programs for buyers to take advantage of and the seller(s) if elected can pay up to a certain percentage of the buyer's closing cost. This can help in a buyer's market where the sellers can assist with closing cost, a little tough to get when we are in a seller's market. This is the reason to plan ahead when you are looking to buy a house in California so that you can save as much money as you can to contribute towards your home purchase. 

Check out some down payment assistance home programs in California HERE and I welcome the opportunity to discuss these programs with you. The cost to buy a house in California can be affordable and may surprise you how much you may need or my not need to own a home.

You will never know until you explore your options on what it the cost will be to purchase a house, I welcome to explore those options with you on how and where we can locate some funds to buy a property of your very own. We can break down the 3 areas to ensure you have the required funds to buy a house in California.

One of the top answers surveyed by potential home buyers was, "What is holding you back from buying a house", this was the number 3 answer, "Do not know how much it will cost to buy". That is why buyers need to speak with a licensed loan officer in California to see what the income, credit and cost will be to own a home.

How much does it cost to buy a house in California? You never know til you start to explore your options and begin your path of homeownership by contacting me directly via call or text at 909-503-5600 or email me HERE to get started. I look forward in speaking with you.

Posted by Nathan Rufty on October 18th, 2015 8:35 PM

Archives:

Categories:

My Favorite Blogs:

Sites That Link to This Blog: