Category Archives: Wealthy

Everything to do with the world of finance.

Buying a home in California Part 2: The search

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We’re back.  After getting pre-approved, we had to figure out where we wanted to look for our new home.  The blue square on the map shows about where we live now.  The green square is where I have to get to for work.  You can see that I have a short commute.

We would have loved to buy a home near our current apartment.  But that’s where step 1 saved us a lot of time.  We could have looked around Sunnyvale until the cows came home, but we would have never found a place that was both big enough for us, and in our price range.

We decided to target the purple area of the map. This included Campbell and other southern San Jose neighborhoods of Cambrian and Willow Glen.  Since we had teamed up with a realtor who was recommended by our Mortgage guy, they helped us locate properties for us to look at on the weekends.  Some of the properties were open houses, and others were shown by appointment.

Our strategy was to begin looking at houses in January, which is the off season for real estate.  This would allow us to have a good foundational understanding of the market, so that we would be prepared for the onslaught of new inventory that we expect to come on the market this spring.

We also considered the chances of buying a foreclosure or bank owned property.

Buying a home in California Part 1: Pre-approval

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The first step of home buying starts with your mortgage. I know that’s boring, but well, it’s the truth. You can’t buy a house without one, and you can’t even seriously look. The pre-approval process is similar here in California to that in Massachusetts. It also starts with finding a mortgage lender and talking to them about what you are looking for. If you don’t know any personally, a good place to start is your bank. In our case, we are members of Keypoint Credit Union, so I decided to fill out the form on their web site.

Within a day or so I was contacted by Ross Huffman and we talked through what we were looking for (single family home), our time frame (sometime in the new year), and price.  Once we had gone over all of that, Ross let us know what kinds of documentation we would need in order to get our pre-approval letter.  Most realtors will ask their clients to have a pre-approval letter if they are going to go out and show them properties.  It makes the process easier if and when you find a property that you want to buy.

The few things that you will need are:

  • pay stubs
  • bank statements
  • tax returns
  • credit report

With those key items, your mortgage lender will be able to determine how big of a mortgage you could afford.  Then you can decide if you are comfortable with borrowing that much money and what your monthly payment would be.  It’s possible that based on your salary and the amount of debt you have, that you might qualify for a larger mortgage than you would feel comfortable with.  These are all topics that you can discuss with your broker.

The entire pre-approval process does not take very long.  A good mortgage lender should be able to give you an idea of what you will be pre-approved for just by having a conversation with you, so long as you are honest with them about how much money you earn, have in savings, and the amount of debt you have.  The full process can take a few days, depending on how long it takes you to provide all of the information to your mortgage lender.

So now that you know your price ceiling, it makes part 2 of the process a lot easier.  In the next couple of days, I’ll post part 2.  Selecting your search radius.

Hard money lenders list

New series of posts coming: Buying a home in California

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Big news. Stacy and I are buying a house in San Jose. I don’t want to reveal too many of the details, because I thought it would be fun to write a series of posts about the process. Needless to say there are many things that are different about buying a home in California than in Massachusetts where we bought our condo.

So this is just a teaser of what’s to come.

The best way to understand this recession

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I know I just linked to Calculated Risk the other day, but over the weekend they updated one of their graphs that I think BY FAR illustrates what our current recession looks like compared to the other recessions since WWII.

Click on the image below for a full size version of the chart.  Each line represents one of the 11 recessions that have occurred since WWII.  The chart represents employment during those recessions.  The far left of the chart is the beginning of each recession, and the further down a line goes, the more jobs were lost during that recession.  The dotted line in the center shows the deepest job loss, or put simply, “the worst it got.”

You can see that this recession has suffered more job loss than any other previous recession, and by quite a large margin.  It took 2 years from the start of the current recession until hitting the bottom, but the recovery is looking a lot flatter than the descent.  We are almost 2 years past the bottom point, but nowhere near back to where we started.

For most people my age, the only other recession on this chart that they will be able to associate with is the 2001 “dot com bubble” recession.  Comparing that brown line to the red line you can see that the “dot com bubble” didn’t suffer as severe of job losses, and it was over by this time.