How do I afford a home in California?

Question

I am considering moving to San Diego. I have $140,000 to put down on a house. I am terrified that I will not be able to live. I can only pay around $2300 a month including taxes and insurance. I have a family with two young kids, so a small yard and schools are very important. Is there any way this can work out for me? I want this move to be a positive one for my family and I.

Should I consider loan options like a 40 year or an interest only 10 year? I plan to be there for a while.

Answer 1

No Worries Dave, (San Diego IS attainable!)

The number ($2300) per month that you have given means that you should be able to comfortably (and safely) manage a purchase of $450,000 to $485,000.

In San Diego, We are experiencing an excellent Buyers Market with an abundance of motivated Sellers offering nicely appointed single family homes in quality locations. Many are located in some of the best School Districts (Poway Unified for example) that should work well for you and your family.

Your TOTAL outlay of $2300 per month can easily be managed using a 30 Yr Fixed Rate Mortgage that offers the option to make interest only payments in the first 10 years. This loan is a Fannie Mae loan that is NOT to be confused with the exotic "Option ARM" that I would advise ALL Borrowers to steer clear of. (Negative Amortization is a license to STEAL)

10 Yr Hybrid ARMS are not attractively priced right now compared to the 30 Yr Fixed rate loan. Ditto for the 3/1, 5/1. and 7/1 ARMs. You would do well with the standard 30 Yr Fixed Rate loan. The 40 Year was recently introduced by FNMA, but I do not like the fact that there is a rate hit (increase) for the 40 Yr amortization option - which takes away some of the lower payment advantage there.

I have been a Realtor and Loan Consultant in San Diego for 10+ years. Let me know if I can be of assistance to you and your family.

Answer 2

Let me began by saying congradualations you have eliminated half the problem by knowing what you can afford. What we dont know is what your credit scores are that will have an impact on your rate which will interm drive part of what your payment will be. Unlike the other answers I will give you quality and sound advice that you can actually use. Assuming you have a 600 mid score and are putting than 0 down on a 285k home. You can expect a rate of about 7% give or take up or down. that would make your payment about 1500 for the first loan. Now because the amount will be small on the second the rates float between 10%-12% so lets say 11% your payment on that would be about 500=$2000 assuming taxes are $250 a month and insurance is $50 you meet your $2300 a month if you need further assistance feel free to log onto www.JustGetALoan.net and fill out a complete application we can have your pre-approval within hours. Also I can be contacted at 1 866 530 7300 ext 7305 or by email [e-mail]

Answer 3

Hi I'm a Real Estate agent in Orange County,CA
feel free to give me a call,my toll free number is [phone]
California Home Realty

The money that your putting down will definately help you out on your mortgage payments.Everything is possible when you work with the right people.Interest only on a 40 year will save you good money.Are you a first time buyer?What's your fico?There are so many programs that you qualify for when putting a big down payment and planning to be there for a quite a while.
Feel free to give me a call. Thank You

Answer 4

An excellent question. I had the chance to move to the SF area for a job, but could not figure out a way to make it work financially.

With housing in Dallas area being what I consider normal, I could not go, or afford to go to a house that was 1/2 million plus for a 2 bedroom little house.

Good luck with it. San Diego is a nice area for sure.

Answer 5

It will depend on where do you want to live in San Diego...odviously near the ocean or bay is going to cost lots more...you will need to budget yourself really good...San Diego is wonderful so I hope you can move there. The other wonderful part about San Diego, is that you can do tons of stuff free with the children and the wife. Big savings right there, like an afternoon in Balboa park, bring your own lunch, a day at the bay --bring your own lunch and coffee.. you see what I mean, the cost of going out of your house is always, food and drinks and ofcourse gas, so do lots of walking, the weather is almost always perfect. Really, my friend, you can do it... trust and know you are taken care of.

Answer 6

i understand your fear..i can only tell you this ..i put alot of money down and got a salt box house here in LA with a adjustable interest only mortgage for the next few years because i plan to sell and move up. Have you seen the prices of homes? I'd advise you to first come to SD for a visit see a realtor and get a feel for what your money can buy..This will help..otherwise you're groping for answers unrealistically..

Answer 7

Have you considered investing that 140K so it grows, and find a rental house? Prices are going down in the North Bay Area, so what I have saved might actually get us a house of our own some day when the time is right.

(Still expensive though *sigh*)

Answer 8

First off...It's great that you're looking into a home and willing to stay here for a while. And if you want to buy now, in the long run it will be a great investment. But for the short term, the market right now is gonna fall and it's going to fall for a while. So my suggestion is for you to just rent for at least minimum 3 years and wait for prices to fall in San Diego and then jump in. So let me break it down for you.

If you bought now expecting a $2300/month mortgage plus property taxes. That means at a 30 year fixed loan, you can afford a loan for around $325000. So with your down payment. That means that you can afford a $465,000 home. The median price in San Diego currently is around $530K. So at your current situation, unless you want to live in a below average neighborhood you can't really afford it. (Kinda sad to say even with a huge downpayment like the one you have). Sure there are ways of paying less now on your mortgage and paying more later with some exotic loan(Option ARM,interest only, etc), but since you can only afford $2300/month I don't recommend you gambling your long term invest by jumping into one of those risky loans. And if you decide to buy now and prices continue to fall, which I believe it will. (I can go into it if you want about the housing market in San Diego, but it will take way too long). Around 3 years a 15-20% decline is highly possible. And just like that. You lost 70K-93K in 3 years of owning your home. There is a strong risk right now with buying. And here's your other option:

Rent in a nice neighborhood. A 3 bedroom home in a much nicer neighborhood can go for around $2000/month easily. And maybe even less. Save that extra $300/month you were gonna spend on the mortgage of the house. So after 3 years you are gonna have $10800 (Around 13K with interest). And if you lock in your downpayment of $140K into a CD for 3 years. You will get around 160K plus the13K you saved by renting a place. That gives you 173K. Pretty much guaranteed with no risk in 3 years. You have just earned yourself on average of a little over $10K/year for just renting and the place you're staying at is nicer than the home you can afford. And then after 3 years. You will be able to buy a nicer home in a better neighborhood at a better price. I suggest waiting longer than 3 years, but since you have children. I'm assuming you want to settle into a home ASAP and settle in for them for the long run. So that's why I suggested 3 years.

But if buying is something that you have to do. And you think home prices are gonna go up. I would like to hear your argument. The argument that everybody wants to live in Southern California and the population is constantly growing all have been disproven by the fact that San Diego has had a negative migration rate for the last couple of years. Probably due to the fact that home prices are sooo expensive here now. So if you really want to buy, just be prepared to be stuck in a below average neighborhood for however long you want to stay in San Diego and be prepared for those prices to start dropping.

Answer 9

Save money, that's how you afford things. Or take out a mortgage, i don't know.

if you're afraid you won't be able to live there, don't, san fran isn't the only nice place in the us.

Answer 10

Consider another state/city.