Can I afford California?

Question

I currently live in Rhode Island but I am moving to California in three months. I got hired for a job in Santa Monica that pays $100,000 a year and my husband was hired for a job in Long Beach that pays $75,000. That’s a total household income of $175,000. Can I rally afford a home on this. I just sold my home in Rhode Island for $230,000 and I made $53,580 after paying the realtor. Where is a good place to live that we can afford, yet still get to work. I don’t mind a long drive, just not too long. I currently travel to Boston for work, which takes about an hour. I would like to own a house, not a condo. I have two sons and would need a 3+ bedroom home. I’m just a little worried how we can afford to live there. I’m flying out on Monday to find a house, but I’ve been looking on the internet and checked out the San Fernando Valley, Long Beach, and Northern Orange County. All I see is homes that are like $625,000 to $950,000. Is this feasible? Can I really afford California?

Answer 1

You can afford California, but yes it is very expensive....You will need to live right outside of LA. There are beautiful towns in the area that a quite a bit cheaper, but I am afraid you won't find the price you are looking for in a home. Good Luck!

Answer 2

My wife and I make about $175,000 a year between us and we comfortably afford about $1 million in mortgage debt.

Consider that, even though your monthly payment will be huge, so will your income tax deductions. At that income and with California + federal income tax, you're looking at about a 40% tax bracket. So, since your loan payment is mostly tax-deductible interest at first, you're looking at a tax return increase of about 40% of your mortgage payments.

For a $1 million house, you would probably have a first at $800,000 and a second at $200,000. Assuming a combined interest rate (average of the 2 loans weighted by the loan amount for each) of 7.5%, you're looking at about $7,000 in payments before taxes and insurance.

Property tax in California is right around 1% or $10,000 a year (and doesn't change much over time). And, you're probably looking at about $1,200 a year in insurance. So, figure about $1,000 a month in taxes and insurance.

So, figure that a $1 million home in California, with no money down, will cost you about $8,000 a month.

But, that means that you'll get back $3,000 in taxes each month because of the tax deductions (only the insurance is not tax-deductible). So, you adjust your tax withholdings accordingly and you are really only paying $5,000 a month on a $1 million home.

So, if you're looking at houses in the $625,000 to $950,000 range, you shouldn't have any problem with your income, as long as your credit rating is above 700.

I don't know if you've checked it out yet, but www.realtor.com is a good site for looking up homes for sale in a given area (by map or zip code). Start at Santa Monica and work your way out to see where is a place you can afford. I would avoid Long Beach or Orange County. The only way to get to Santa Monica from there is the 405 freeway and it's a zoo all the time.

Answer 3

You should have no problem finding a home in Los Angeles, now the question is what comfort level are you willing to accomodate to? If your mindset will be that of the Rhode Island pricing, you have a difficult time accepting what you can afford. Im Santa Monica, you are looking at no less that 500K for a residence. But homes are very expensive at this point, your best bet would be to find a short sale and work from that. DO YOUR RESEARCH, internet search cities outlying LA so that you may find a reasonable commute. Right now a 30 min ride East of Downtown LA will roughly run anywhere from 450k to 600k depending on the condition of the property (3bd & 2bth). Godspeed and welcome to California

Answer 4

There are many great properties in california, specially in the san fernando valley. You should look at areas such as woodland hills, winnetka, granada hills, north hills. Im not sure about Orange and Long beach my area is in the valley. visit us at www.greatwestcapital.com and go to my partners links. you will find a link to needapad.com This is a great way to look at properties in your price range. If your not sure about price range, than you shoud get pre approved to figure our how much buying power you actually have and what would be a comfortable mortgage payment.

These areas also have top grade schools with charter designations from LAUSD and they are close to the freeways you need to access.

Answer 5

The housing market in LA is practically at a standstill. A lot of homes are foreclosing! People are desperate to get out of their mortgage's without having to file bankruptcy. You may be able to leverage a pretty good deal. I would also check on new homes. A lot of developers are anxious to sell the homes. And are practically giving them away. they are offering all kinds of incentives to qualifying buyers. My Sis got a great house for way below market. Good Luck! Hope you have a good Realtor!

Answer 6

California is relatively high priced while it includes the two value of residing and housing. And on a similar time as the two you and your husband make sturdy funds, do no longer forget that state taxes and aspects taxes are relatively criticism worth. it relatively is suggested that the housing marketplace is estimated to chop back some over here couple of years with the aid of overbuilding/overpriced properties. you're able to do study in this on line-- there are a number of articles who help this declare. I stay in San Diego and have kin throughout California. the conventional cost for properties in SoCal is everywhere from 500,000 up. 3 bedrooms are greater problematic to locate with the aid of fact of course, they're proper. attempt dealing with a real aspects agent and notice what they are in a position to do for you. you may constantly attempt renting a house/condo for a on a similar time as till you will detect a house on your budget and on a similar time as you verify if California expenditures are right for you and your loved ones.

Answer 7

You have a great income and can afford some sort of house in Cal. I live in Seattle and it's the same up here. I don't think you can find a shack around here for under $400,000.00. I am so glad I own the home I have lived in for 30 yrs. Paid $27,000.00 for it back in 77!