home buying – Page 4 – OC Neighborhoods

How We Disproved 7 Home Buyer Myths

Home buyers especially first-time home buyers many times have misguided beliefs about the requirements to become a homeowner. In this post, we are going to disprove some of the popular myths about home buying.

Myth #1. You need to have perfect credit scores to purchase a home.
Credit is among the list of factors your lender will review to determine if you qualify to buy a home. Having excellent credit isn’t required to become a homeowner.

Different home loan products have different credit score criteria.
A home buyer with fair credit score of 650 may be able to qualify for a government-backed FHA loan, USDA loan, or VA loan. Actually, with FHA you can have a score as low as 580 for a 3 1/2 percent low down payment.

A regular conventional loan requires a 620 or higher score. This is not considered a good credit score so the lender may want to see that you have paid all of your debts on time in the last two years. Speak with a mortgage professional for details.

Myth #2. You can’t get a mortgage if you have student loans
Don’t be discouraged if you have student loan debt of $50,000 or more. Lenders care more about your monthly payment for student loans more than how much you actually owe. You could owe $100,000 but your payment is only $100-$200/month.

Myth #3. Renting is always more affordable.
Renting is not always less expensive than buying a home. According to a Rental Affordability Report by ATTOM Data Solutions 2019, “purchasing a median-priced home in California is less affordable than renting a three-bedroom home.”

However, the report further mentions that Southern California rents rose faster than median home prices in Orange County, Los Angeles County, and San Diego County. Mortgage payments are fixed at a set amount and don’t change while landlords can raise the rent annually or once your lease term expires. So, the belief that renting will always be more cost-effective than buying is one that can be easily disproved.

Myth #4. You need to have a 20-percent down payment.
If you are in the camp believing you need to continue to save for a down payment until you accumulated 20-percent down, there’s some good news. The 20-percent down mantra is from decades past.

Government insured loans by FHA allow as small as 3.5 percent down. There’s conventional loan products which allow 3-percent down payments with mortgage insurance. Borrowers eligible for VA and USDA loans may get up to 100 percent financing.

Some loans allow your down payment to come from gift funds. Furthermore, California and some private organizations offer down payment assistance programs to help you by a home. Look for options when necessary.

Myth #5. Go look at homes first before you know your loan options.
It can save lots of time and money if you look for the right mortgage before you start searching for a home. Your mortgage lender should pre-qualify you first and then truly pre-approve you based on your verified income, monthly debts, assets, and credit history and scores.

Myth #6. It’s better to pay the full price the seller asks for.
As a final point, home list prices are flexible. Depending on the situation, you or your real estate agent can make an offer above or below the list price. After all, the appraised value should come in at or above the list price.

Myth #7 Contingencies cannot be changed
You may also be able to negotiate contingency periods. Specific repairs and other maintenance after your home inspection can be re-addressed after your offer is accepted. Examples of what can still be negotiated are the seller paying for a home warranty and the date of closing.

Using the services of an experienced real estate agent can help you figure out elements of the deal you want to negotiate. Now that these home buyer myths have been dealt with, speak with an agent or loan originator to get started.

Home Buying Tips: Planning for New Expenses

If you’re a first-time home buyer who has never owned a home and just bought a home in California, there’s a chance you’re thinking about what type of new expenses will you have.

Not surprisingly, many homeowners in the Golden state are satisfied with their purchase due to the evidence that owning a home in California has turned out to be a wise investment.

If your home is in one of California’s larger cities, like the San Francisco Bay area or Los Angeles – Orange County metro this is especially the case. Numerous benefits can be gained by owning a home. However, home ownership is also accompanied by many responsibilities too.

As a homeowner, when you have problems you cannot call on your landlord or the maintenance person to handle it. You are directly responsible for taking care of all the repairs, the property taxes, replacing appliances, or anything else.

Not all, but most California home owners will come across dealing with the following expenses:

Homeowners insurance
Property Taxes
Home maintenance and
HOA fees
Private mortgage insurance (PMI)

Home Insurance
This may not be a new expense for you if previously had renters insurance on the home or apartment you were renting. Homeowner’s insurance covers you in case your home is robbed or damaged by fire or weather events. In California, this is calculated at .0035 * cost of home. You may want to add optional earthquake insurance too.

Property Taxes
This is another expense which is often overlooked by new home owners as they tend to calculate just the principal & interest portion of the mortgage on their new home. Property taxes are usually assessed and required at the county level. Some counties impose an additional tax.

Orange County has the Mello-Roos tax in some newer home developments. Generally, property taxes are based on the value of your home multiplied by 1.25% and due every six months. If you become late on paying your property taxes, late penalties are added to the amount due . If you become severely behind, the state may place a lien on your home, for the amount due and if not paid for five full years may put your property up for sale.

Home Maintenance and Repairs
When you purchase a home, the homeowner is the one directly responsible for taking care of your place. If an appliance stops working or a floor tile is broken or cracked, you’ll have to pay for the repair costs. If your air conditioning or heating starts to malfunction, or your roof starts leaking, you’ll be the one to pay for these costs. This can add up a lot and surprise your bank account if you didn’t get a professional home inspection prior to buying the home.

HOA Fees
If you purchase a condo in California, the payment of a Homeowners Association (HOA) fee will be required. HOA fees are assessed to pay for a variety of maintenance costs in common areas of the community, such as landscaping, trash pickup, recreational facilities, cable TV.

Based on the condo community you select, condos HOA fees can range from just a couple hundred dollars a month to $2,000 per month, or more. See if the community had any special assessments for replacing the roof or other 5-10 year large expense repairs.

The repair can be on a totally separate building in the community but all owners share the expense. Some detached home and townhome communities also have HOA fees. Check into it with your realtor.

Private Mortgage Insurance (PMI)
Not every California State home owner will need to obtain Private Mortgage Insurance, Many home buyers who bring in a down payment less than 20-percent will need PMI or they may be able to get a loan with PMI built into the rate. When you purchase a home, you’ll need to figure out which way you want to go, because this expense can be considerable.

How to Prepare for These New Expenses
Aside from educating yourself about these expenses, you should have, or save, some funds dedicated entirely for these types of home ownership expenses. If you fail to plan for these expenses, they can really add up and make the experience of owning a home not enjoyable. Whether you’re buying a home in Aliso Viejo, Mission Viejo, Laguna Niguel, San Juan Capistrano, or any other area in California, being prepared for these expenses will make the transition to home ownership enjoyable.

Why Did the Seller Reject Your Offer?

Rejected offers can result in major stress and problems for home buyers. An answer of “No” from the seller or their agent is all that it takes for your purchase offer to be declined. This may be the 3rd or 10th home you’ve made an offer on in Orange County’s competitive market. So, the home buying process continues but you should learn the reasons why your offer was not accepted to be successful next time.

The following are the four main reasons purchase offers are not accepted.

Declined Offer Reason #1: Your Price Is Far Too Low
1. Sellers can easily feel insulted or angry and turn down the offer instantly.

2. If a buyer offers a very low price, the seller might feel the buyer is not qualified or not serious.

3. If the house was just listed in the last seven days, the seller might think it’s too early to consider and counter an offer that is well under list price.

Reason #2: Selling Agent Is a Jerk
Buyer’s agents who have a reputation as hard to deal with could make the listing agent and buyer’s life miserable while under contract. If the selling agent (buyer’s agent) irritates or bothers the listing agent, particularly while in a multiple offer situation, it shows the buyer’s agent in a bad light. Be certain that your agent isn’t a person who does the following:

Uses an aggressive tone of voice on the phone or in person.
Doesn’t say please or thank you when communicating ever or rarely.
Does not exhibit a level of professionalism towards other agents.
Insults the listing agent by labeling them as stupid, inexperienced or incompetent.
Maintains an attitude of being superior.

When the listing agent has two identical offers to present to the seller they could say, “The Agent for offer number one is difficult to deal with, and the Agent for offer number two is professional. Which offer do you want to consider?” Most sellers given this information will go with offer number two.

Reason #3: Offer Did Not Fulfill Seller’s Specific Needs
Selling agents should always review the agent remarks in the listing. If they are items you buyer can satisfy, don’t forget to put them in the offer.

1 .If the seller needs a 60 or 90-day escrow period, offer a closing date that works for the seller.

2. If the seller requests a sizeable earnest money deposit, add that into the offer.

3. In some cases, the listing mentions the seller will only accept all-cash offers, so don’t write an offer with financing contingencies or it will probably be declined.

Reason #4: Your offer was too high
Let’s say the seller receives multiple offers that are over list price of $750,000 for a home in Orange County. The first offer was $15,000 over list price. The second offer was $30,000 over list price. The third offer was $55,000 over the list price using an escalation clause. While the higher third offer was attractive to accept, the agent explained that the home is not likely to appraise for $805,000.

This meant the buyer would have to bring in an additional $55,000 beyond their 5-percent down loan and closing costs. It was later discovered the buyer from the third offer did not have extra funds and would rely on the home appraising higher or receiving a gift. So, the seller chose the lowest offer of the three over list price because if the appraisal came in low that buyer did in fact provide proof of having an additional $15,000.

These are just some of the reasons among many why a buyer’s offer is not accepted. By working with an experienced buyer’s agent at HomeFinderOC.com, you can feel confident of your chances to securing the first homes you make an offer.

Less Bidding Wars for Orange County Home Buyers

When two or more buyers make offers on the same property it’s considered a bidding war. The seller usually accepts the highest and best offer among the multiple buyers along with terms they like as well. Over recent years this was the typical situation in Orange County depending on the price point. That’s when the housing market was unquestionably in a seller’s market and the inventory of homes was lower.

This is fantastic news for potential buyers. They no longer have to be concerned with competing against as many as 20 offers when the seller’s market was at its peak. In addition, there’s more homes for sale to pick from, and mortgage interest rates have been recently dropped. This is becoming a great time to buy a home.

The findings of a February 2019 report by Redfin reveals:

Only 13 percent of offers written by Redfin buyer’s agents were in a bidding war. That number represents a 53 percent drop from the previous year.
In every market where Redfin agents serve home values decreased.
California housing markets that had the largest percentage declines in home bidding wars were: San Francisco (-64%); Los Angeles (-57%).
One major California city is still among the most competitive and that’s San Diego; yet only one out of five offers by a Redfin agent had buyers that were involved in a multiple offer situation. That number is down by more than fifty-percent versus a year ago ¹.

Meanwhile, since January 2019 housing supply has been increasing.

According to the most recent RE/MAX National Housing Report, sales of homes have declined for six straight months and is the biggest increase in ten years.
• RE/MAX analyzed 54 different markets and it showed an average inventory rise of 6.4 percent.

On March 26th, additional evidence of home sales slowdown came out when the S&P CoreLogic Case-Shiller index showed home prices in Los Angeles and Orange counties rose 2.9% in January from a year earlier, but that was substantially lower than other months ². In Orange County, sales dropped 17.1% and prices fell 1.4% to $700,000.

What is occurring is actually quite natural according to experts. Through the past few years, home prices went up quickly until they reached a price level that many buyers became unwilling to pay the high prices. Meanwhile, interest rates were rising and topped out in November 2018. Homes started getting less and less offers and did not sell as quick.

Inventory of homes is also climbing due to buyers sensing the market is near a top, and people don’t want to buy at the peak.

What does this data mean for home buyers?
It’s actually good news if you’re shopping for a home. There is less pressure for home buyers to accept a house without their desired features such as a large kitchen, a true bedroom with a closet, two-full baths, or a two-car garage.

Market conditions are in your favor get a home soon
Many experts agree: If you qualify, make the most of today’s housing market prices and purchase a home since multiple offers are way down. Real estate is a long-term investment. So if you come across the house you want, do it now.

Then again, make sure you’re in the right financial position to take advantage. Know what’s on your credit report and make sure there’s not any errors. Get pre-approved for a mortgage prior to searching for a home. Use an experienced real estate agent to achieve your goal.

Sources:
1. Orange County market slowdown – https://www.ocregister.com/2019/03/27/market-slowdown-lingers-as-february-home-sales-drop-12-corelogic-reports/
2. SoCal Home Prices: https://www.latimes.com/business/la-fi-southern-california-home-prices-20190327-story.html

Quick Guide to Trouble-Free Condo Buying

Purchasing a condominium comes with some advantages such as normally residing closer to main areas of the city, better value for the price than owning a home, and fewer problems about maintaining the exterior of the property.

Distinctions of Owning a Condo and a Home
Owning a condo is somewhere in the middle of owning a home and renting an apartment. you have neighboring tenants with shared walls or floors but you actually own the unit.

Then again, as a condo owner, you have to rely on the condo association and other owners to deal with common area issues like the roof, stairwells, elevators, parking garage, and any shared facilities.

A strong condo association is what you’ll want to have, or your experience may not be favorable. The following are items that you should research with your realtor before writing a purchase offer:• How much are the condo fees and what specifically do the include?
•      Is the community professionally managed or do the owners manage?
•          Are there any planned special assessments and if so how much?
•          What are the financial reserves and is it adequate?
•           Are there any owners late on their HOA dues and if yes how many?
•           How many units are currently owner occupied and how many are rented?
•           What are the restrictions on renting condos?
•           Are there any pending legal actions against the complex?
•           What is the parking policy? Do I own my space? Is there guest parking?

Research The Condo Association
Among the best advice for buying a condo is knowing the financial soundness of the community. The association is responsible for keeping everything working in your community as well as rules and regulations for the owners to obey.

Learn Who Your Neighbors Are
Everyone has different needs with regards to a relaxed and wonderful home. If you are a hard working professional, living next door to a condo with first and second year college students is probably a deal breaker.

If you are in your retirement years, perhaps living next to those close to you age group is preferable than one with a high-school student who practices music at home. It is better to be safe than sorry later on so you have to do your proper research.

Consider the Neighborhood
While you may have fallen in love with the condo’s gorgeous exterior architecture, a spectacular kitchen, or the way the floor plan is so well set up. You cannot forget the significance of the surrounding neighborhood.

The kind of questions you should be considering include:
• How far is the community from the 5, 405 freeways and 73 Toll Road?
• What major conveniences are nearby that I need?
• Is there a lot of crime in the area?
• Will noise from the street, train, or anything else be a factor?
• How are the local schools for possible resale later on?

Property Upkeep
Discuss how maintenance is handled with the association, because you don’t want to spend the next few years (or more) frustrated by the lack of maintenance.

Exterior
Another gray area can include roofs and windows. These are obviously costly repair items that you will want to know who is responsible for, especially if they are nearing their life expectancy.

Get a 2 or 3-bedroom For Best Resale Value
Although you may only need a studio or one-bedroom, two and thee-bedrooms are much easier to sell and fetch better resale values. In addition, you may be able to rent the extra bedroom subject to the HOA’s rental policies for owners.

Is The Condo Complex FHA Approved?
Learning whether the condo complex you are interested in purchasing is FHA approved is very important. The reason why is because FHA loans let a qualified borrower only have to bring in a 3.5% down payment. This is a great popular program for first-time home buyers who don’t have more funds available.

Storage Space is Important
Storage is a typical concern for condo owners. Figure out what your storage needs are so it will not be an issue after you buy a condo. Some condominiums may come with your individual garages, shared garage or offer storage areas for each unit.

Views
Whenever possible, a good condo purchase is one that has a respectable view. More people tend to like having a view which also makes it much easier to sell a condo. It is advisable to stay away from condo with views of garbage area.