This year California housing market conditions makes a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California). This assumes the buyer is making a 20 percent down-payment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year. Reported by the National Association of Realtors
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Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make:
1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.
Source: CNNMoney.com, Les Christie (04/19/2010)
Mitra Karimi
At Crestico Realty, we believe an informed client is a happy client, so we do our best to make sure you are informed, every step of the way! The first step we take in doing this, is to inform you before you become our client and give you a taste of our excellent customer service. Below, is information that many first time homebuyers seek from us every day.
You’ve decided to buy a home. It seems like the right and best thing to do, but why. Many first time home buyers ask us why it is better to own a home than to rent one. Renters face many challenges that homeowners do not. Primarily, if you get the right loan (which we can help you with), your mortgage should stay affordable every year and you will not be faced with one of renters’ biggest problems: rent increases. Next, why not let the place you live give you some tax benefits? Renters do not get to enjoy the same tax benefits that are associated with owning your home. If you have a family, or are thinking about having one; wouldn’t it be nice to have your kids born and raised in the same place? We all have fond memories of our childhood and our childhood homes. Kids love backyards and swimming pools and treehouses and slumber parties. These are things that may not be as accessible and as private as you would prefer them to be if you rent an apartment.
Also, when you rent, you are not making an investment, you are merely spending money. Money you spend on repairs, upgrades, decorations, renovations and rent loses its value once it leaves your checking account. But when you own a home, the money you spend on everything from landscaping to decorations becomes an investment, and you will see a return on that investment. You might say that everyone is talking about losing value and losing equity, but that’s only applicable to today’s market. If you look at the real estate market, over time, you will see that it is a cycle and any money you spend today will eventually regain its value tomorrow. And finally, above all owning a home means you OWN it and can do anything you like with it. You can decorate it and express yourself in a way you would not be as free to, if you were renting someone else’s property.
Next, first time home buyers find themselves faces with the question of location. We’ve all heard the saying “location, location, location!” That should give you a clue that location is very important. You will need to consider your lifestyle and your needs when determining a location for your home. Do you have children? Is the quality of the schools in the area an issue? Are you looking to join a community? Your Crestico agent can help you determine your needs and find the perfect location for you.
The next thing to consider is the money. The amount of money you will need to buy a home depends on many things including the cost of the home and the mortgage you get. Your Crestico agent will go over each and every step with you and introduce you to our preferred lender, American Guardian Home Loans and together they will explain the entire process to you. Generally, when you are purchasing a home, you will need to have cash on hand to pay a deposit when you submit your offer so that the seller will take your offer seriously. Also, you will need cash for the down payment and the closing costs (to cover the processing of the paperwork involved).
Most people purchasing a home do not do it entirely with cash. Most buyers needs loans. Choosing a first time home buyers loan can be a daunting task. It may seem overwhelming because there are so many different types of loans with different names and options associated with them. Not to worry, Crestico Realty has a dedicated representative at American Guardian Home Loans who is there only for our clients.
Finally, one more thing a first time home buyer should be aware of is insurance. Having the right homeowner’s insurance policy is an important part of being a homeowner. Homeowner’s insurance differs from renter's insurance in that it protects your home and its valuable contents from occurrences like theft, fire, floods and earthquakes (depending on your location and type of policy). There are other kinds of insurance, such as Private Mortgage Insurance (also known as PMI) which may be required, depending on your loan and mortgage terms. Your Crestico agent will work with you to get you the best value in insurance policies because Crestico Realty is your one stop shop for all your home buying needs. We are part of a network of professionals and have extensive relationships in the industry that we use every day to make sure you are getting the best the industry has to offer.
