Let’s Dominate the California Housing Market: A 15-Step Blueprint
Alright, let’s talk real estate, California style. We’re not just buying a house; we’re securing our future, building wealth, and living the damn dream.
1. Assess Your Financial Situation and Future Goals
Let’s face it: predicting the future is tough. Who saw a pandemic coming? Or the wild swings in California’s real estate market? But here’s the deal—now’s the time to assess your financial landscape.
In California, median home prices surged by 5.4% from June 2021 to June 2022, but they dipped 4% from May to June 2022. Signs of a cooling market? Maybe. If you’re eyeing a property, now could be your moment.
Start with your credit score. It’s your ticket to the best mortgage deals. If your score is lacking, dispute errors, pay down debt, or settle those nasty collections. Remember, Del Real emphasizes knowing why you’re buying—space, investment, future needs—but always buy within your means. If the right property hits your radar, don’t hesitate. Go for it!
2. Determine How Much You Can Afford
California isn’t cheap—no surprise there. But figuring out what you can afford isn’t just about numbers. Use an affordability calculator (like the one from HomeLight) to get a grasp on your financials. Input your income, credit score, zip code, and down payment to see where you stand.
3. Research Special Programs for Down Payment Assistance
California offers down payment assistance programs that can make homeownership achievable. Look into options like:
- Golden State Finance Authority (GSFA)
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- GSFA Platinum® Down Payment Assistance Program – Down payment and closing cost assistance up to 5.0% of the mortgage loan amount.
- FSGA platinum Down Payment Assitance Program
- GSFA OpenDoors® Down Payment Assistance Program – Down payment and/or closing cost assistance up to 7% of mortgage loan amount.
- CalHFA
- Forgivable Equity Builder Loan – Gives first-time homebuyers immediate equity of up to 10% of the purchase price of the home in the form of a loan. If the homebuyer occupies the home as a primary residence continuously for five years, the loan is forgivable.
- MyHome Assistance Program – There is a program for government loans and for conventional loans that offer deferred-payment junior loans for 3.5% and 3% respectively to help with the down payment and closing costs.
- City-specific options
- To find out if your specific city has affordable housing options or programs, you can contact your city directly.
Please note that these programs are subject to change and you will need to contact these entities directly for more information and to determine if you might qualify. Not all lenders offer these programs, and in some cases, a lender will need to be specifically approved to offer them.
Do your homework—these programs change, and not every lender offers them. Get in touch with the right people to see if you qualify.
4. Shop for a Mortgage and Get Preapproved
Preapproval is crucial. It tells you how much you can borrow, giving you leverage in negotiations. Shop around for lenders and mortgage types. Understand your options, from conventional loans to FHA and VA loans.
Pro Tip: A conventional loan might need a credit score of at least 620 and a down payment of 5%. Jumbo loans? Think higher limits and stricter requirements.
5. Research the Market
When diving into the California market, consider median home prices, days on market, and local hazards. Here’s a snapshot from June 2022:
- Southern California: $830,000, 10 days on market.
- Bay Area: $1,400,000, 12 days on market.
Know your target areas and what they offer.
6. Find a Local Agent
You need a local expert on your side. Look for someone who knows your target neighborhoods inside and out. They should communicate openly, guiding you through the emotional and logistical aspects of buying a home.
What to look for:
- Experience in your price range.
- Positive client reviews.
- A connection—this process is a marathon, not a sprint.
7. Start the House Hunt in Earnest
Now it’s time to get serious. Narrow down your list of must-haves and nice-to-haves. Know where you can compromise—if you have three kids, a one-bedroom isn’t going to cut it.
Even in a cooling market, be ready to act quickly. Your agent will help you navigate options. Remember: you might not get everything on your wish list.
8. Make a Strong Offer
Found the one? It’s time to make a move. In California, homes can fly off the market in days, so be prepared.
Strategies to strengthen your offer:
- Fewer contingencies
- Higher earnest money
- Cash offers if possible
In a buyer’s market, you have more flexibility. Be strategic and consider negotiating seller credits to lower your long-term costs.
9. Send Your Earnest Money Deposit
Your earnest money shows you’re serious. Typically between 1% and 3% of the purchase price, a higher deposit can make your offer stand out. Know the terms—if you back out for non-contract reasons, you might lose that money.
10. Order Inspections and Get an Appraisal
Home inspections are a must. They’ll reveal hidden issues, and you’ll need an appraisal to ensure the home is worth what you’re paying. Don’t skip this step—it’s your safety net.
11. Shop for Homeowners and Specialty Hazard Insurance
Homeowners insurance averages around $1,200 annually in California, but don’t forget about hazard insurance if you’re in a high-risk area. The California FAIR Plan can help if you struggle to get standard coverage.
12. Negotiate Repairs
If the inspection uncovers issues, it’s your chance to negotiate repairs or credits with the seller. With the market cooling, sellers might be more flexible than before.
13. Order a Title Search
A title company will conduct a title search to ensure the seller has the right to sell the property. This protects you from any nasty surprises down the line.
14. Final Walkthrough
Your final walkthrough is crucial. Check that all repairs have been made and the home is in the expected condition before signing the closing documents.
15. Close on Your New Home
Finally, the moment of truth! You’ll sign the final documents, wire your down payment, and once everything is settled, grab the keys to your new home.
You’ve made it! Now go enjoy your new space and the fruits of your hard work.
Remember, buying a house in California is a major accomplishment. But it’s also a strategic move. Play your cards right, and you’ll not only secure your future but also build significant wealth.
Let’s dominate the California housing market together.
