Tag Archives: Finance

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.

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.

Wrapping up another session of classes…

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Last night I put the nail in the coffin for my Financial Management course by taking the final exam. I think it went fairly well. I still need to throw dirt on the coffin by finishing our last case study assignment, but it shouldn’t be too hard to finish. Tomorrow night I will take the final exam for Managerial Decision Making Analysis, which should also be fairly easy, and then a short hour or two of work to finish that final project and this session will be a wrap.

Next session with be BUS 202, Managing in the global economy. And possibly an elective. Not sure.

New for 2010 – Rollover to Roth IRA conversions

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This may not be of value to very many, but for those few it may be VERY valuable. For those with a “traditional” IRA or a “rollover” IRA, you may be one of the people that it’s VERY valuable for. As we’ve covered before in our “Do the minimum” retirement post, there is one major difference between a traditional (or rollover) IRA and a Roth IRA. With a traditional, the earnings of the money in the account are tax deferred. With a Roth IRA, they are tax free. This is a large advantage of the Roth for those that will have large amounts of appreciation in their IRA accounts. The traditional IRA does have something in its favor however, and that is it reduces your taxable income for the current year. For example, if you make $50,000 and contribute $5,000 to your traditional IRA, you will pay taxes on $45,000. Continue reading →

Will that be credit or debit?

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Most of us are used to hearing this question whenever we pull out the plastic from our wallets. Over the past few years, I have flip flopped on my answer to this question depending on my current situation. And now, that I have worked myself out of debt, I think the situation may be even more complex. Let’s go over the history of things to see how we got into this situation.
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