Though the process of buying a home is similar across the country, your home buying experience will vary from state to state, and California home buying has its own unique processes and steps. If you’re about to embark on purchasing a home in the state of California for the first time, it’s important to know what to expect. Preparation ensures a smoother journey. Here’s what you should know:
Understanding the California Real Estate Market
There are many things you might be worried about as you embark on your home buying mission, and understanding the market is one of them. The California real estate market, in particular, exists in many extremes and is ever-changing. Predicting future trends is difficult, and even when you find accurate data and can safely track where the market is headed, analyzing the numbers in real-time and deciphering that data into something meaningful is a complex process.
By the time you find an online guide to California’s real estate trends, those trends may already have shifted. This is why it’s so critical to work with a California real estate agent that understands the market. However, you can make some general assumptions based on historical data. For instance, during the California winter season, you’re likely to find more solid deals. However, the state sees the majority of homes listed in the Spring between April and June, so if you’re hoping for a bigger market and more potential to find your dream home, you might choose to start your search early spring.
You May Be Working With Dual Agents
A dual agent is someone who works with both the buyer and the seller in a real estate transaction. In some states, dual agency can result in complicated legal issues because agents are required to offer their clients undivided, unbiased, and loyal attention. This means that they are intended to act in the best interest of their sole client. This could very well be considered a conflict of interest.
Naturally, a dual agent is able to circumvent their fiduciary duties to be solely loyal to you. The state of California allows sellers and buyers to be represented by dual agents, however, agents are always to main confidentiality. In this case, the boy buyer and seller must offer written consent.
While some people may advise you against working with dual agents, finding yourself with one isn’t a terrible situation, and it works out very well for many buyers. What’s important is working with a reputable agent with a verifiable reputation. A solid dual agent will walk a very fine to remain as neutral as possible for both parties.
NHD Reports Are Required
Due to its location, the state of California is prone to many types of natural disasters. Because of this, the state requires sellers to disclose information about how potential disasters could affect the property. This is done with natural hazard disclosure reports (NHDs). An NHD real estate report is an important document that provides crucial information to potential home buyers.
In many areas, such as California, this document is legally required for homeowners. With a natural hazard disclosure, potential buyers and real estate agents can learn more about whether a home is in a hazardous area. For example, if a home was located downstream from a dam—even if it seemed far enough—the report analyzes the impact on a home if something were to happen to that dam. Essentially, it looks at all possible scenarios to determine the worst possible outcome based on various factors.
Meeting the Seller Isn’t Required
Some states require the seller and buyer to meet in person at least once before finalizing the transaction at the closing table. But this isn’t the case in California, where many buyers and sellers are represented by agents, and those agents communicate with one another on behalf of their clients.
In California, many aspects of the home buying process can be completed with one half present, so there is a possibility that you never interact with the owner of the property. Once all the paperwork has been filled out, the keys are delivered to you. While this may seem a bit impersonal, it can make the end-to-end process much more efficient because no steps are delayed by scheduling conflicts.
You Don’t Need an Attorney
Currently, there are 22 states that require a real estate attorney, including New York, Florida, and Virginia. In California, an attorney isn’t required, and the transaction utilizes standard forms and agreements throughout. Your real estate agent will work with you to complete the forms. Although having an attorney review the completed forms isn’t mandatory, many buyers choose to do so. If your transaction is a bit more complex or if you have questions that your real estate agent can’t answer, consider involving a real estate attorney.
Like many industries right now, real estate will undoubtedly be affected by the spread of COVID-19. As efforts to flatten the spread curb are continuously enforced, it’s clear that preventative efforts impact the economy overall. But to what extent can we expect real estate to be affected? As of now, data doesn’t forecast a housing crisis similar to what we experienced with the housing bubble in 2008, but there are key things to be aware of. The impact on real estate will vary depending on the market and sector, however, impacts will exist.
Currently, mortgage interest rates are falling, and in early March, CNBC reported that they may even fall as low as zero percent. “There’s a lot of volatility in markets, and the Fed is very concerned about market functioning and keeping liquidity free-flowing and credit available,” said Michael Gapen, head of U.S. Economics at Barclays in an interview with CNBC.
This gives current buyers the opportunity to pay down the loans through a home refinancing. According to Freddie Mac, the average rate of the 30-year fixed-rate mortgage dropped to 3.29%—lower than the last staggering drop that occurred in 2012. However, these low rates may not be available for long, and will most likely not fall beneath 3%.
This is because these rates are impacted by uncertainty, but as the situation around us becomes more finite and predictable, interest rates are likely to rise again. Furthermore, with a slower market, more buyers might consider this a great opportunity to invest while competition slows down. Buyers entering the home market space may be able to snag a much better deal than they would have been able to a few months ago.
“Even if they come out and say maybe the coronavirus will be a little bit worse than we thought that would bring certainty,” said Jay Farner, CEO of Quicken Loans. “If it makes sense, you can save money, you got to lock your interest rates. Take advantage of the savings.”
The lack of Chinese buyers will also contribute to a market slowdown, particularly in states like New York and California where wealthy foreign buyers invest in luxury properties. Chinese buyers spent around $13 billion between 2018 and 2019, which was already 56% lower than the year prior. As a result, the upper-end market is expected to get even softer. Although there are several other contributing factors (such as tighter immigration laws and strict regulations on international spend), COVID-19 will further compound the issue, as travel bans prevent buyers from seeing the property in person.
On the flip side of that coin, as things settle down, we may see an influx of Chinese buyers further down the line, particularly during times of unrest in their own countries. For example, after the anti-government protests in Hong Kong in 2019, there was a spike in properties purchased in the United States from buyers in China.
This also impacts property development. Because China is so integral in the world’s supply chain, businesses that rely on products sourced from China will be forced to wait longer than usual to get the supplies necessary to continue property development.
“There are still sales,” Mary Roberts, Arizona Realtor Association President, said in an interview. ”People will always need to find people always needing to sell. They could get job transfers, getting into a new school year. It’s always going to be buyers and sellers having to do.”
Naturally, it does have an impact on the way that real estate agents and buyers and sellers are interacting with another. For instance, real estate agents need to ask questions about the health status and recent of their potential clients for the betterment of everyone. This could make viewings and open houses more complicated. Sellers might leave all doors open and lights on for prospective buyers and request that visitors don’t touch anything and wash their hands. However, agent-client relationships can still continue to be fostered virtually and digitally.
At first glance, investing a rent-to-own property might seem like a safe bet. After all, there are many touted advantages when it comes to this method of home buying. With rent-to-own properties, the buyer has the option to purchase the home in the future while renting during the interim. The option to purchase remains with the buyer and some of the money that has gone towards rent is applied to the down payment on the home further down the line.
The benefits include the ability to opt in with bad credit, test drive a property, lock in a purchase price, and build equity as a renter. While these all sound like favorable options, there are many cons associated with this type of arrangement. Often, if it seems too good to be true it’s because it actually is. This is especially true when there are common misconceptions about rent-to-own.
For example, many people believe that rent paid in a rent-to-own agreement goes towards the down payment. In fact, the rent goes towards the owner’s mortgage, while a rent “premium” goes towards the down payment. A typical contract lasts between one to five years, and the renter is expected to make a home purchase at the end of the contract. While it may be unfair to advise others to avoid renting to own, we advise you to think twice about it and really weigh your options. Here’s what you need to know:
One of the biggest issues with rent-to-own properties is the amount of plausible scams. People with poor credit, low income, and big wishes for buying a home become easy targets for scammers looking to take advantage of less-than-ideal circumstances. Understanding the most common rent-to-own scams will help you better understand when you’re in a compromising situation.
One of the most popular scams involves setting up an agreement with someone who doesn’t own the property that you’re agreeing to rent to own. In this scheme, scammers will list a vacant house online as their own, and disappear after they’ve collected the money. Another scam, though technically legal, is when the property owner attempts to list the house way above market value. Those that don’t understand the real estate market can be easily tricked into paying much more than they should.
Even agreements with sellers who are honest can often lead to disappointment when the fine print isn’t on your side. If you insist on rent-to-own, always get advice from a professional legal representative with experience in real estate.
Option Fee & Rent Premium
In a rent-to-own agreement, renters are required to pay an option fee and a rent premium, which may make their costs substantially higher. The option fee is an agreed upon amount between the renter and seller, and if the renter agrees to purchase the home at the end of the contract, that fee goes towards the downpayment of the home.
Rent premiums also become rent credits towards the down payment. For instance, an option fee of $200,000 might be $5,000, while a rent premium might add another $200 or $300 to the monthly rent. Those extra hundreds accumulate towards the downpayment of the home.
However, if the renter doesn’t want to purchase, the option fee and rent credits are non-refundable. Even if the renter discovers serious issues with the property and decides to walk away, they’ll still lose any rental credits they’ve acquired, as well as the option fee. And furthermore, many agreements void the rental fee even if the renter is just one day late on the rental.
You May Not Qualify for a Mortgage
Many wannabe homeowners choose rent-to-own because it appears to be a viable option for people with bad credit. However, when the contract is up, you are not guaranteed to qualify for a mortgage, which means if your credit is good or cleaned up by then, you could lose significantly more than you would have as a typical renter.
Some renters hope to clean up their credit while saving for a down payment on the home, but there are never any guarantees. There are other reasons the buyer may be unable to make the purchase; for example, they may not have enough income or may not have a large enough down payment. Furthermore, if the seller has failed to pay the mortgage on the property, the renter could be forced to move as the home goes into foreclosure, and rarely is the potential buyer protected in this situation.
You Are Still Your Own Landlord
As a renter, you get the added benefit of turning to the landlord if you run into any complications. If there’s an issue with your plumbing or your gutters, you can call on your landlord to fix the issue, as they remain responsible for the property. However, with a standard rent-to-own home agreement, the potential buyer is responsible for all of their own fixes—even during the rental period.
Contracts Aren’t Standard
There aren’t standard contracts for a rent-to-own agreement and each state has their own regulations for rent-to-own arrangements. For instance, you never know what you’re getting into, and because of this, renters may find themselves in compromising situations. You want to make sure that there are no issues with the property title or that the home isn’t in foreclosure. If you’re looking for some of the conveniences of rent-to-own without potentially shoddy legal mishaps, consider researching some alternatives, like a land installment contract or wraparound financing.
Market May Fall
During a rent-to-own situation, you’ll typically lock in your prices. If the market goes up, then you wouldn’t have to pay as much on the home. However, if the market falls, you’ll end up paying higher than market value. Furthermore, there’s no guarantee that if the market rises, your landlord won’t be as receptive to following through on the contract, especially if there are clauses that you don’t understand.
San Diego boasts 70 miles of stunning coastline, and the city’s near-perfect year-round weather makes this a spectacular place to experience everything the water has to offer. There are a variety of ocean activities that give you a different vantage point of San Diego and its marine life. No matter what time of the year, there’s something for you. Here are a few ways you can get in the nautical spirit of the oceanside city:
San Diego Sailing Tours
If you’re a laidback sightseer, sailing might be the best way to approach the water. It’s a great way to leisurely enjoy the splendid views that San Diego has to offer, and there are themed tours from San Diego Sailing Tours that take the experience up a notch.
Hop aboard a classic sailing yacht and breathe in the fresh salt air. You can opt for a romantic sunset cruise via a private booking, or enjoy a trip with a large group. The most popular option is their two-hour-long Signature Sailing tour, but you can also go for the Whale Watching Seafari tour, which is great for individuals who enjoy nature and want to explore local marine wildlife.
Live on a Boat
If you enjoy being on the water, why not try living on it? At least temporarily. With Airbnb, you get the opportunity to do just that. There are dozens of San Diego boats that you can opt to rent for a weekend on the water or a longer stay near a San Diego pier. For instance, this San Diego boat has downtown city views from a beautiful vantage point in San Diego Harbor and is a quick ride from the Gaslamp Downtown area.
The boat is fully equipped with everything you might need for a floating night of sleep for two. If you want something a bit more built out, check out this San Diego houseboat, a two-story water home that features two full bedrooms and two water adventure kayaks. Experience the tranquil lifestyle of living on the oceanside right on Harbor Island. On a floating home with a comfortable sea breeze, you can’t go wrong.
Replica Ship Tours
History buffs can rejoice on San Diego’s replica ship tours. To start, immerse in a bit of nautical history at the Maritime Museum. San Salvador is the crown jewel, which arrived in San Diego in 1542 to search for trade routes that linked Mexico to Europe and Asia. The vessel was the first recorded European ship to sail along the California coastline. This working replica took five years to construct, for a total cost of $6.2 million.
The San Salvador Sailing Adventure lasts four hours, and once or twice per year, you can opt for multi-day trips. You can also go on a 4-hour adventure history sail aboard the Californian replica, where you’ll learn to haul a line and man the helm.
San Diego SEAL Tours
One of the most unique San Diego tours is the SEAL Tour. The convertible bus begins on land, taking you through the city’s scenic sights, and then transforming into a boat before it plunges in the bag. The tour is completely narrated, with 30 minutes on land and 60 at sea. At sea, you’ll see sea lions, seals, and local birdlife.
On land, you’ll learn about San Diego’s historical sights and rich naval military history. Choose to depart from either Embarcadero or Seaport Village. Because the tour isn’t too long, it’s perfect for children, as it keeps their attention span throughout.
Hornblower’s narrated cruises are a great way to explore harbored cities around the world. For instance, why not take your brunch to the seas, where you can enjoy a hot and cold buffet, plenty of entertainment, and mimosas under the sun. Dinner cruises offer exceptional multi-course meals under the starlight and post-dinner dancing. Additionally, there are often seasonal events, like the Fourth of July fireworks dinner, or family-oriented Easter Weekend cruises or a Thanksgiving dinner buffet.
Adventure RIB Rides
If you want to get up close and personal with San Diego marine life, Adventure RIB Rides are for you. Although these rides tend to be a bit bumpier than traditional boat rides, they’re perfect for adventure enthusiasts. This inflatable boat allows you to be closer to the water and truly appreciate your surroundings.
Their program is the whale and dolphin watching tour, a three-hour exploration adventure that puts you front and center with some of the most intelligent water creatures. You’ll meet gray whales, a friendly species that often comes up to greet the boat; blue whales, the largest living creature is ever known to exist on the planet; and the Minke whale, a curious species that is fun to watch.
Although whales are the main attraction for these tours, dolphin pods are known for joining in on the fun, too. And lastly, you’ll get stunning San Diego skyline views along the way.
Conduct a quick search for “historic homes in San Diego,” and you’ll quickly find hundreds of viable results. San Diego is chock full of historic properties, there are several historical associations in the city. In fact, the city has over 1,000 historic structures.
The South Park Historic District was the first streetcar suburb in the city, and according to the San Diego Planning Department, “The district consists of 299 contributing resources, all developed between 1906 and 1949, and 108 non-contributing resources. The degree of integrity exhibited by the district contributors makes it one of the best-unified examples of an early 20th-century streetcar suburb in the community.”
As you browse homes, it’s important to understand the difference between a historic home and an old home. Historic homes are often categorized in two ways: those that were built before 1945, and those that were built before 1900. Homes built before 1945 could have distinct features and fixtures that would be very difficult to replace or fix.
The official list is managed and maintained by the National Registry of Historic Places, and you should always double-check that a property claiming historical significance is listed. With that in mind, here’s what you need to know about buying a historic home in San Diego:
Be Aware of Home Improvements
Most likely, one of the first considerations you’re making as you sort through potential historic homes is that you’ll have to make a few home improvements. After you feel pack the layers and sort through the results of a home inspection, you’ll have a better idea of what you’re working with. For example, you might discover that you need a new central air system, find water damage, or even more—you may discover asbestos, mold, or mildew.
Some updates might not be pesky to deal with. On the same token, it can be frustrating to find parts, paints, and detailing that match the current style of the home. And if several other homeowners have resided in the property before you—which is likely—you may find that those previous updates are quite mismatched.
Historical Homes Aren’t All Fixer-Uppers
This might seem like an antithesis to the aforementioned point, but the fact is, not all historical homes require significant renovations. Sure, you may run into a historical home that needs a bit of work. However, San Diego has done a great job at ensuring historical properties are well taken care of; you shouldn’t shy away from a historical property simply because you believe you’ll run into wonky wiring, dilapidated walls, and antique everything.
In fact, many properties with a historic designation are quite modern in their own right. Some have beautiful inground pools, while others are fully outfitted with up-to-date central air. Listings will give you an accurate 2D description, but you should always check out a property on your own to learn more.
The Historical Resources Board was designated to protect San Diego’s historic properties from alterations deemed inappropriate. The Board follows the U.S. Secretary of Interior’s standards for restoring and maintaining those buildings. This means you are highly limited in terms of what changes you can make to your property. For example, you may not be able to change the paint color on the exterior color of the home or create an add-on to your property.
Before you start taking extra steps, it’s important to keep this extra layer of red tape in mind. If you enjoy a historic property just as is, and don’t plan to change or detract from the original aesthetic, then a historic property might be better for you. Additionally, there are many changes that the city might approve—so it’s important that you don’t get discouraged if your heart is set on a historic home.
Your Insurance Could Be Expensive
Despite the financial benefits of maintaining a historic property, you may find yourself facing higher insurance rates. There are many insurance companies that don’t offer the full coverage that a historic property needs, which means you’ll end up having to acquire insurance from a niche historic home insurance company, which is more expensive than traditional options. These companies understand that older properties are at a greater risk for potential issues, such as structural damage or roof replacements.
But this doesn’t mean that every historic homeowner will have to deal with sky-high insurance; homes are evaluated on a case by case basis. Either way, you should take advantage of the “credit” system designed for historic homes. This is where homeowners receive credits that lower insurance costs when they take steps to reduce potential property risks.
Whether you decide to purchase a historic home depends on your specific preferences and whether you believe the pros outweigh the cons. Always do your research, and work with a reputable agent who has experience in the San Diego area, and preferably has experience working with historic homes.
Searching for a new home can be an exhilarating experience, but there’s so much more to property purchasing than a must-have home feature checklist. Even if a home checks all of your box, there’s still much more to a property than meets the eye. You also have to consider your surroundings. Your neighborhood can make or break your long-term living experience, and when it comes to such a big investment, chances are you’ll want to do a little sleuthing. And with that in mind, here’s how you can learn a little more about a neighborhood:
Rent an Airbnb
Airbnb is an online marketplace for accommodation and tourism experiences. But more importantly, it’s a great way for you to become truly immersed in a particular neighborhood. If you’ve ever rented an Airbnb in another state or country, you understand that there’s a stark difference between this mode of lodging and renting a hotel. Renting an entire apartment allows you to feel at home in space. It gives you a firsthand look at what it’s like to live in that particular neighborhood. And fortunately, Airbnb allows you to filter your results by neighborhood.
Take this time to explore many of the tips previously mentioned: take yourself on a self-guided walking tour, stop to explore neighborhood amenities, buy groceries at nearby markets, and dine at local restaurants at cafes. You can use this opportunity to take advantage of a weekend getaway.
You can also take this a step further by checking one of Airbnb’s more recent features, “Experiences.” Using this tool, you can locate nearby Experiences to truly immerse yourself in the area. For example, some featured Experiences in San Diego include kayaking in La Jolla, whale and dolphin watching, wine cruises, cultural tours, and cooking classes. Moreover, these Experiences are hosted by locals who are happy to talk about their neighborhood and city.
Take a Walk
It seems simple enough, but it gets the job done. Taking a walk around the neighborhood is a great way to get an close-up view of your surroundings and what a neighborhood consists of. Not only does this give you a good sense of the area, but you’ll also get to see what it’s like when people are out and about. Do you see people jogging often, walking dogs, or is it relatively quiet? Is it a young community, a family community, or are there more retirees?
Although you can find these demographics online, it’s entirely another thing to experience it firsthand. This is also a good opportunity to stop and talk to others on your walking route, and asking them what it’s like living in the neighborhood. And this is one of the best ways to learn more about a place. By walking around, you can take note of the things that don’t necessarily make or break a listing, but that may not have been mentioned by your real estate agent.
Test Your Commute
Your ability to get to and from work plays a big factor in your decision making. When you’re considering a neighborhood, test out your commute to see how it works for you. By doing this, you’re able to really hone in on your quality of life. Simply checking your route on Google Maps isn’t enough to get you a realistic idea of what to expect on a day to day basis.
By taking the drive or public transportation route yourself, you’ll know what to expect and whether there are any potential factors that make a house less ideal. Of course, this doesn’t mean you should check the commute for every home you like. Only test your commute when you’re down to two or three shortlisted options to make the most of your time.
Check Social Media Groups
Many neighborhoods around the country have at least one social media group listed somewhere. For example, you can find dozens of social groups in San Diego on Facebook, like the San Diego Conscious Community. These Facebook groups can prove beneficial for anyone interested in learning more about the place, and you’ll be able to ask questions to current residents. Additionally, you can find plenty of organized events on Meetup.com, where you’ll find plenty of events across different hobbies and interests. Furthermore, this gives you an idea for potential smaller communities that you’d be interested in joining within your neighborhood.
You can also check out the Nextdoor app. You can use this app to connect with neighbors and engage with the community. This social networking platform is dedicated exclusively to communities and is comprised of more than 180,000 neighborhoods around the world. The core of the app is to create a sense of community, and this goal is reflected in its mission statement. But the app also allows you to sell and buy locally, organize and join events, and look for recommendations.
The aforementioned tactics help you learn about the character of a neighborhood. But NeighborhoodScout is all about data, and these numbers and statistics can complement other research you’ve done. Simply type in an address to pull your data set. You’ll learn about unique home attributes (i.e., whether there’s a high concentration of brownstones), median home prices, crime rates, and much more. NeighborhoodScout alerts also answer the hard-hitting questions about a neighborhood, such as:
You’ll also be able to see key price drivers in that particular neighborhood. For instance, you’ll be able to sift through factors that might drive the home value up over the next few years or negative trends that may have a harmful impact on home value.
As you prepare for the transition from renting to buying, there’s plenty to be excited about. Owning your own property is exhilarating, and having just entered 2020, it’s a great time to create a resolution that you won’t want to give up.
For first-time homeowners, the process can be tricky, and you might quickly find yourself making compromises as you rush through to the finish line. And for previous homeowners, you may regret some of the hasty and uninformed decisions you made when you purchased a home for the first time.
Starting early allows you to make many of the important decisions that you struggle within a time crunch, like what neighborhood to live in or which renovations are a priority. Here’s a 2020 checklist to help you become a homeowner within one year:
Analyze Your Credit Report
The first thing you’ll want to do is get a free copy of your annual credit report and score. Your score will help you gain a better understanding of where you are right now and where you want to be. Getting your credit report a year in advance allows you to identify and fix any potential errors. Studies have found that as much as one out of four Americans have found mistakes on their credit report, and those mistakes could easily result in higher interest rates and lower credit scores. With several months ahead of you, you’re given the proper time you need to rectify any issues and have those fixes reflected in your report in the future.
Get Pre Approved
A mortgage pre-approval is one of the first and most important steps in your 2020 checklist. Getting a pre-approval puts you several steps ahead in the home buying process. Your pre-approval will give you a realistic idea of what you can afford and help you find homes that fall within your budget. Armed with a pre-approval letter, you’re also able to stay competitive amidst other potential buyers. This will help sellers understand how serious you are about making an investment.
Depending on where you’re at in your process and timeline, you might not be prepared for a pre-approval. For example, if you’ve taken a look at your credit score and credit report, you might need the proper amount of time to build up your score and fix and discrepancies. In this case, you might opt for a prequalification instead, which tells you how much you prequalify for based on an analysis of your finances. This isn’t concrete, but it can give you a solid overview of where you stand.
Create a Buying Budget
Once you have a preapproval or prequalification, you can create a buying budget to determine what your home buying costs will look like. This includes your down payment, padding for unexpected expenses, renovation costs, moving costs, closing costs, homeowner fees, and more. It helps to talk to other homeowners to get a realistic idea of what you can expect to pay as a homeowner. Many buyers are burdened with last minute financial setbacks that they were unaware of prior to purchasing a home.
Although we live in a world of instant gratification, buying a home takes time and patience. Start off by gathering all your monthly bills and listing your expenses. In addition to your utility bills, you also want to consider any mobile subscriptions, monthly entertainment fees, and other additional items that you don’t get paper bills for. Finally, go through your credit and bank cards and analyze each item line by line. Start number crunching on how much you’re currently spending on things like groceries and leisure activities.
A concrete savings plan makes it much easier to take the proper steps you need to achieve those savings goals. With such a big purchase on the horizon, it can be fairly intimidating, and a structured savings turns a big task into bite-sized chunks.
Create a savings goal based on your pre-approved mortgage and your expenses. Your savings goal is your down payment. You may have heard that you need 20% down payment to purchase a home. This isn’t necessarily true, although the bigger your down payment, the better interest rates you’ll get.
Your target goal depends on how much you can realistically afford to put down. Some federal governments work with mortgage companies to allow qualified candidates to own a home with as little as 3% down. For the sake of this example, let’s assume that you can place a 10% down payment (in this case, you’d need to take into account that you can expect to pay a private mortgage company until you’ve reached 20%).
For a $300,000 home and 10%, you’d need to save up $30,000. By now, you should already have funds saved up, and you can subtract your current savings from that number. Divide the remainder by 12 months, and you’ve got your monthly savings goals. Set up automatic transfers with your bank to stay on target.
Start Looking at Homes Online
Once you have a budget in mind, it’s a good time to start a preliminary search online. While not everything you find online is accurate—especially when it comes to listings and market data—an early online search will help give you a general sense of what you’re looking for and what you can realistically expect to get within your price range. Check out different platform, like Zillow and Trulia. You should also take a look at real estate agent sites, as they tend to feature neighborhood properties that stand out.
Find the Right Agent
When you’re searching for the best agent, it’s important to speak to multiple candidates. Think of this like an interview process. The person you’re hiring will guide you through one of the most important investments of your life. And when you’re working with a one-year plan, it’s crucial that you choose a no-pressure agent that isn’t pushing for a sale.
Your ideal agent will be understanding of your timeline, work within the deadlines you’ve set for yourself, and help you fine-tune your home-buying strategy. The good thing about choosing your agent far in advance is that you get to see the long-term value they bring and get plenty of opportunity to see how they work. If you aren’t happy with them, you still have enough time to find another. The right agent can also help you tap into off-the-market listings.
Becoming a homeowner is exciting and invigorating. The prospect of having a home to call your own—with total creative freedom—is enough to make anyone optimistic about taking the leap into homeownership. Many people today are choosing to take that leap with their friends. This comes to form in many shapes and sizes; some people move in together as single friends, while other friends are combining their households to have two families and/or partnerships under one roof. Some couples are empty nesters and prefer not to live alone.
According to this survey, the majority of Millenials are willing to take out a mortgage with family or friends if it offers them a foothold on the property ladder. While this way of home buying certainly isn’t traditional, more people than ever are going for it. With the right steps, purchasing a home with friends can be a fruitful, happy, and successful venture. Here’s what you need to know:
Discuss the Future
No matter who you are, your plans and trajectory in life change. Before you move in together, it’s important that everyone have a transparent and candid conversation about what their future looks like. Unlike an apartment lease, you’re opting for a commitment that will last for years to come. The average homeowner remains in their property for roughly seven years; even higher in certain areas. Naturally, you have to consider what each of your plans to do financially should you decide to split up.
If you’re in a relationship, you should also discuss the prospect of having children in the home. Pregnancy can change the dynamic of a household, and it’s something everyone should talk about if any of the household members plan to have children in the future. “We talked about our family plans for the future,” said Deborah Tepley, who agreed to purchase a home with her husband and another couple. “TJ and Bethany wanted to have kids, and we’re kind of on the cusp of that. So we started hashing out what this would actually look like, and we started intentionally setting aside money.
Having an exit strategy is a safeguard against circumstances where one of more people want to leave the house before the others. After all, you cannot guarantee that everyone will want to move on (should the day come) at the same time. An exit strategy will outline buyout options, and how the finances will be managed moving forward.
One of the biggest benefits of teaming up with friends on a home purchase is sharing the financial burdens. The cost of living in many cities has gone up, and the vast majority of Americans simply can’t afford to purchase a home right out of college. With combined incomes, you’re able to afford a home, save money in the long-run, and even score better homes with better amenities. And finally, you’re able to get a home much sooner than you would otherwise.
“It would’ve taken us longer to save up, and we would have had to rent or get roommates in order to afford it,” says Tepley. “And thinking about repairs—we already had to repair the roof, and suddenly a $3,000 bill becomes a $1,500 bill. It makes it a lot less intimidating burden when you can share the house expenses.”
With that in mind, discussing finances is a huge part of the financial equation. Everyone should be upfront and honest about their income situation, credit, and budget. Each individual should be gainfully employed, with savings in the event of an emergency. Remember: the house is under everyone’s names, and one missed payment has a negative impact on the group as a whole. It’s best to be comfortable enough to look at each other’s credit reports and discuss finances before you meet with a lender.
Talk Lifestyle & Routines
Everyone has a different lifestyle, different habits, and different daily routines. Sit down together and map out what a typical day or typical week looks like for one another. This will help you avoid bumps along the road. For example, perhaps you hate the smell of smoke and one of your friends is a smoker. Discuss smoking areas around the house to avoid disagreements in the future. There will likely be less bathrooms than there are people; talk about work routines and ensure everyone gets enough time to get ready for the day or evening.
Because you never know how an arrangement will go until you’re in it, you might want to consider living together in a spacious apartment before you take a bigger step towards owning a home. Another way to learn more about how a person handles different situations is to go on a trip together. A vacation or long-term travel trip will offer deeper insight into how you handle the ups and downs of travel, the level of organization, etc.
Divvy the Bills
Owning a house comes with several expenses. From maintenance costs to utilities to Homeowners Association fees, you can expect several bills to come in the mail. Even though you’re sharing the costs, you should have a plan in place for who’s responsible for paying which bills. This keeps the household responsibilities fair and equal. On the same note, you should also discuss who’s responsible for certain “chores.” Although it’s fair to assume everyone should clean up after themselves, having a rotating schedule for thorough cleanings helps keep your home in tip-top shape.
Keep Paper Records
All of the discussions you have should be more than just a verbal commitment. When you’re moving in with your friends, you should make it a priority to get everything in writing. Sure, the home loan and other paperwork have signatures, but you also need to have contracts between one another. This might seem arbitrary when you trust your friends, but it’s best for everyone in the long run. Approach it as a necessary part of the process, and not because you don’t trust one another. A lawyer can help facilitate this process. This way, each detail is ironed out and everyone will feel much more comfortable with the arrangement.
It’s no secret that San Diego has plenty to offer. With a thriving arts scene, beautiful weather, and sprawling nature all around, it’s no wonder that so many homeowners choose this city as their home. Still, everyone loves a great getaway. And fortunately, San Diego is the ideal base for a mini vacation. With ample destinations within driving distance, you’ve got plenty of options. Here are some choices:
Joshua Tree National Park
Driving distance from San Diego: 3 hours
Joshua Tree National Park is one of the most beautiful places in the West Coast. At sunset, the sun gives the desert floor a beautiful, illuminating hue of red, while the sky itself transforms into a rainbow of color. The sunset viewing spot at Keys View gives you stunning views of the Coachella Valley, Salton Sea, and San Andreas Fault.
Peruse the Cactus Garden, stargaze at stunning galaxies far away from light pollution, and visit the sound bath at the Integration—a dome-shaped structure where music is played using crystal quartz bowls. If nature is your goal, there are endless options you can indulge in.
Sequoia National Park
Driving distance from San Diego: 7 hours
Sequoia National Park is a majestic display of natural beauty. Here, you’ll find gigantic, breathtaking redwood trees—some as old as 3,500 years. Some trees as high as 300 feet tall (almost as tall as the Statue of Liberty) and 30 feet in diameter.
There are several well-equipped and cozy campgrounds you can choose from, as well as nearby lodges. For example, some of the biggest trees can be found near the Wuksachi Lodge. There’s also an underground cave labyrinth of stunning rock formations and streams. For sweeping park views and Insta-worthy photos, head over to Moro Rock. If you visit this area, you can also get two for the price of one, as Kings Canyon National Park is right next to it.
Driving distance from San Diego: 5 hours
Ojai is a beautiful place for a holistic and healing escape from your day-to-day life. The region consists of mostly agricultural land, and you’ll find delicious local food and produce. Each time you eat a meal, you’ll be supporting the local economy of this beautiful place. The Ojai Valley Inn is one of the best places to stay. The 220-acre property is its own campus, with different types of accommodations and high-end amenities.
Nearby, the Los Padres National Forest is full of wildlife, desert plants, and redwood trees. And because of the mountain range that faces east-west, keep your eyes peeled for a breathtaking sunset the color of pink and lavender.
Driving distance from San Diego: 2.5 hours
For the perfect combination between a golfing getaway and a nature trip, look no further than Palm Springs. The greater Palm Springs area boasts over 100 beautiful golf courses, and the region is chock full of award-winning restaurants and luxury hotels (including the Ingleside Inn, which was popular with celebrities when it was originally built a member’s club in the 1920s).
Aviation enthusiasts will rejoice at the Palm Springs Air Museum. And at the Palm Springs Aerial Tramway, you’ll go from the desert floor to the mountain summit within just a few minutes. Depending on the time of the year, you may even be able to play in snow during peak summer.
Distance from San Diego: 2 hours by ferry
Catalina Island is easily accessible through a catamaran service directly from San Diego. Relax on one of the island beaches, opt for a fishing trip, or go scuba diving or snorkeling. There are also plenty of adventurous activities to be found, from parasailing to canyon ziplining and hiking. Enjoy a relaxing trip to the spa or take the whole family on a kayaking trip. This quaint island is full of fun activities for friends and family and doesn’t disappoint.
Driving distance from San Diego: 6 hours
Despite its intimidating name, Death Valley is one of the most beautiful natural landscapes you’ll find in the state of California. From sand mountains to craters and dunes, this valley covers 3,000 square miles of space and is known as one of the driest, hottest, and lowest points in North America.
The sand dunes near Stone Pipe are teeming with long, sculpted dunes and mountains in the backdrop. Climb to one of the higher points and set out a chair to soak in the scenery. In Badwater Basin, you’ll be able to see the mountain range reflected in the water and in Zabriskie Point, hike across hard-packed ridges of Earth patterned with colors of brown, red, and gold.
Driving distance from San Diego: 1 hour
In Temecula Valley, you’ll find vineyards and golf courses galore. It’s also a very popular area for hot ballooning, and has a strong arts and culture scene. It has the perfect climate for grapes, and boasts more than 40 wineries (within 10 years, the number of wineries is expected to double). Air balloon flights are available year-round, weather-permitting. Different packages offer different types of experiences; for example, you might opt for a wine-balloon experience.
Driving distance from San Diego: 3 hours
As California’s largest recreation lake, Big Bear is the perfect place for water activities galore. Whether you enjoy kayaking, skiing, camping, fishing, or hiking, there’s something for you. The area boasts one of just two alpine zoos in the country, where you’ll find arctic foxes, bald eagles, and even a snow leopard. Enjoy a picnic at Boulder Bay Park, ride a bike along the Alpine Pedal Path, or get your adrenaline pumping with a zipline tour.
Driving distance from San Diego: 1.5 hours
Rosarito is a great place for a beach getaway in a different country. Today, it has become one of the most sought-after destinations for Californians looking for a sandy escape and relaxing mini vacation. When you’re not soaking up the sun, there are plenty of local souvenir shops and art galleries to peruse. And if you want to continue on with a fun night, there are just as many nightclubs, bars, and lounges where you enjoy nature during the day and dance the night away.
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