Our SF Bay real estate market is currently HOT and considered a sellers' market. What that means in real estate lingo is that properties are listed at one price and are generally selling for more money. What that does NOT mean is that list prices are accurate (just a number representing a range) and that buyers will have to OVERpay for a property to buy. There are more buyers looking to buy than sellers wanting to sell, which creates the HOT status of our market.
Affordability is the BIG deal in our area...no surprise there! We are fortunate to be in an area that is proximal to good paying jobs, great weather and higher property values... as well as higher costs for just about everything. When looking to buy, the first move is (hopefully) to become PREQUALIFIED or PREAPPROVED. This, my friends, is the time to ask alot of questions about your preapproval and what it includes and qualifies you for!
Before you begin the conversation with your loan officer, ask yourself if you have short-term (2-7 years) or long-term (7 years +) plans with your planned purchase. This will help open-up or narrow your options, when looking for financing. If you know you don’t plan on keeping the property longer than a few years, your mortgage options should include adjustable-rate loan programs that are fixed for the first 3, 5 or 7 years. You can enjoy the initial (lower) fixed rate for as long as you expect to stay there and add a bit to your maximum loan amount.
Once you have your preapproval, a very important question for your loan officer, is "Does it include a monthly Homeowner insurance (HOI) amount OR a monthly Homeowner Association (HOA) amount?" Although sounding similar, they are NOT AT ALL the same and can affect the affordability in a BIG way. A real-life example is buying a townhouse for $660,000 (with a monthly HOA fee of $465) OR a single- family home for $750,000 (with a monthly HOI premium of $75). The monthly "housing expense" is about the same and you can see what a difference it can make in your price range.
With emotions at all-time highs during the home-buying process, it is VERY IMPORTANT to have trusted professionals (Realtors, loan officers, inspectors, etc.) working on your behalf AND available to listen to all of your questions and concerns. Try not to give in to the pressures of busy salespeople that MAY NOT be treating “your money” like “their money”.
Happy house hunting!!