Buying a home in Orange County, CA is not the easiest thing to do. But it's not as difficult as some make it out to be. Long gone are the days of needing 20% down payment to purchase a home. While zero down loan programs are mostly gone, except for a few specialized programs like the VA loan, which is for active duty military and retired veterans, there are programs like FHA, which only require a 3.5% down payment. But this article is about a recent home buyers journey to buy a home in Orange County.
Mike and Heather Didn't Like Paying Rent
Mike and Heather had been paying rent for more than 7 years. In 2006 they had tried to buy a home, but Orange County home prices had gotten so high that it didn't seem possible. They continued to rent since renting was cheaper than owning. But eventually reality set in for the real estate market and prices dropped. Dramatically. Homes that were valued at nearly $700,000 at their peak were now selling for $400,000 in 2011. A Jumbo loan is not needed anymore to buy a home in Orange County. Not only that, but interest rates dropped to all time lows, hovering in the high 3's to low 4 percent range.
In 2011 it's Cheaper to Buy a Home Than Rent
Mike and Heather's rent kept increasing every year. Also they had a one year old and had another on the way. They not only would need more space, but also wanted to get established in the good school district. They decided to check into buying a home again after a friend purchased a home for $400,000 and mentioned that his payment was less than $2,700 per month, counting taxes and insurance. When calculating out the tax savings they would have because of the mortgage interest deduction, Mike knew it was time to get serious. Not sure where to start, they went to the Internet to search for homes. But they quickly realized that they needed to know how much they qualified for. Or more importantly, how much home they could buy while still keeping their payment within their budget. They tried a few of the "big banks" but couldn't find a loan officer who gave them straight answers or who seemed able to answer their questions. It was actually difficult to even get a return phone call from the big banks. They decided to narrow the lender search to someone local. Through the Internet they found Tim Storm (yeah, me. I usually don't incorporate myself into these stories but someone had to do it.) Tim was able to prepare custom loan scenarios based on multiple home prices, multiple home programs, and multiple down payment amounts.
Choosing the Best Loan Program
FHA seemed like a good option since it only required 3.5% down. The interest rate was very low and it was fixed. But Tim also showed a Conventional program with 5% down payment. And he showed how the monthly mortgage insurance could be eliminated by paying a one time up front premium. This saved more than $200 per month on a $400,000 purchase price when compared to the FHA program. And it was nice to not have a monthly mortgage insurance payment.
PreApproved and Ready to Buy A Home
Now they were ready. After providing all their income and asset documentation, completing a loan application, running credit, giving a pint of blood and their first born (well, not the last two items, but you get the picture), they were Preapproved for the loan. They were now "confident" home buyers since they knew exactly what they qualified for and what their payment was going to be. And being Preapproved also meant a fast 30 day escrow would help in negotiations.
Hire a Real Estate Agent for Best Results
Of course it helps to have a great agent on your side. What many home buyers don't realize is that the seller pays the buyers agent, not the buyer. There is not a cost to the buyer to have representation. Fortunately Mike and Heather were referred to an agent that was able to help them out. The agent set them up on a custom Multiple Listing Service property search so that they were able to stay on top of the newest listings that fit their criteria for a home. After a few hits and misses, and visiting a few homes which helped to narrow down their "needs" list for a home, Mike and Heather made an offer on a very nice home in a family oriented, tree lined Orange County neighborhood. Their agent guided them through a few counter offers and within a week they had an accepted offer at a price of $395,000.
30 Day's to Close the Loan and Move into their Home
Within 30 days (being PreApproved made the 30 days fly by) escrow was closed. Of course there were inspections and and few things that needed to be fixed prior to closing (this is where it's nice to have a good buyers agent on your side), Mike and Heather were ready to move into their home.
Mike and Heather are now are happily in their home. And with only 5% down payment and no monthly mortgage insurance, they know they don't need to worry about a landlord increasing their payment anymore. Now if they can figure out a way to "fix" their child care costs, everything will be perfect.
Authored by Tim Storm, an Orange County, CA Jumbo Mortgage Loan Officer MLO 223456– Please contact my office at Home Point Financial for more information about an Orange County, CA Mortgage. 949-829-1846. www.OCHomeBuyerLoans.com
Contact us for your Orange County Mortgage:
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