Buying a House in This Market

I see where you live. Yes, stocks are down and so is real estate. My guess is that California real estate will not go down much more and has the potential to go up up UP. Stocks can be volatile and can go all the way down to zero. If I had the chance to buy something in California that I could live in, too, I'd do it.

Hope it is not too late to pitch my 2 cents, but be sure to talk to your accountant about the tax implications of selling those stocks! Are you really selling them at a loss below purchase price? If not, you are going to lose a chunk of that egg to capital gains. Speak to your accountant and find out if it doesn't make sense to rent a really small place for a year and just pile up cash for the down payment.

We came right on the tail of a buyer binge here. Every house we tried to bid on had several other offers. It is crazy.

You might try an FHA loan or if you are out far enough in a rural area you might qualify for a USDA loan. FHA is 3.5% down, and has a lower rate than your conventional loans. USDA is 100% financing. You might also try a credit union. Our will do a conventional loan of just 5% down.

Just gotta keep and eye out.

You are going to sell stock to buy a house? Stocks are a long term investment, i.e. 25plus years. This doesn't sound financially savvy to me, unless of course you are wealthy and have lots of money.

I believe you can get a 10% down if you have really good credit.

We started out renting while the landlords let our home go into forclosure while we were still paying them rent! It was a long year battle but GOD blessed us to be able to purchase the home from the bank on a short sale for more than half of what is was listed for years before we rented.

I concur with it being a buyers market and the time is now to buy.

In my area it's a buyers market.
I think it might be best for you to find a good mortgage broker and go from there. That's what we did. But we had 20%, so I can't help you there.
Are you familiar with the rule that says mortgage, pmi & taxes should not be more than 25% of your net salary? We've found that to be very true.

We closed on our house last July, so almost a year ago. It was a fannie mae (homepath.com) and it was 3% down, they also pay up to 3% in closing costs. The nice thing with Fannie Mae is you don't have to pay pmi. Otherwise you pay pmi unless you put down 20%. Not all lenders deal with fannie mae though. You can also get an FHA loan for 3.5% down. Your best bet is just to talk to a mortgage professional and see what they say about getting you prequalied. I would try to find a direct lender instead of a broker since they do all the underwriting in house and it's easier to get answers. We went with Castle and Cooke. They approve you with the intention of selling the loan (most lenders end up selling your loan anyway). Good luck!

you think you can afford a home for 600k and you are worried! LOL post like this make me chuckle

I can't imagine that a 400k home is that terrible to settle with...lol ours is 100k and it's a nice home...I know you live in CA but still

BTW we bought a little over a year ago, found a great forclosure home.

Not sure about your housing market, but it's crazy here in the Sacramento area. There were 18 offers on a home on our street. Multiple offer frenzy. Not enough homes on the market and when they get on the market, they're being snapped up. The home on our street with the 18 offers had two people die in the home in the past two years and it didn't deter anyone. One of the parents at our kids' school said it took them nearly a year to finally get a home, it's been so competitive.

Not sure about what people have to put down on homes these days, but you might talk to a realtor to get a better sense of your local housing market before making a decision on the rent vs. buy situation.

We just bought a house 2 months ago. We had the 20% down and still had to jump through major hoops. Definitely don't regret it though - got a fantastic price. We ended up paying 225k less than previous owners bought it for in 2005 - wasn't even a short sale or foreclosure.

I don't know about cali, but getting a jumbo where I live with less than 20% down would be extremely difficult. I had a hard time finding a jumber with only 20% down - a lot of banks wanted 30%.

Anyway you can move to Nevada????? The last house we lived in was a brand new 2000sf 3bd, 3 ba, house with hardwood floors and a 12,000sf lot-sold for 120k! My house is 10 years old on 1/3 of an acre, 1200 sf 3 bd, 2 ba we bought for 85k.

We just bought a house....5% down, of course we have to pay mortgage insurance because of this, but were able to pay a set price for it, paying part of it at closing and the rest rolled into the 30 years. So it didn't make much of an impact on our monthly payments.

Now is the time to buy, you have a lot of bargaining power.

According to Suze Orman, housing prices aren't going anywhere, and interest rates aren't going anywhere. If you don't have 20% to put down, you should probably rent for at least another year. Your stocks might go down even more. Whatever money you have for a down payment, you should probably start moving it (or just adding to it) to a money market account or CDs.

When we bought our house (January 2006 -- ugh), we didn't anticipate that we would need to replace all of the carpeting due to my daughter's allergies and replace the entire HVAC system. We also decided to remodel one of the bathrooms and add a brick patio just because we couldn't get enough of watching our nest egg disappear ;-) We have put at least $100k into our house for repairs and upgrades. It is currently worth about $30k less than what we paid for it.

The stock market is pretty volatile right now, and for you to cash out and put that money into the real estate market, that can be quite risky. If you're not 100% sure that you are done having kids, you might regret the house you buy if you end up having more kids. Don't forget about the financial devastation that could happen if you have a fairly large earthquake too.

You've got plenty of time to put yourself on more solid ground financially. Ideally, you should have 20% to put down on a house AND have an 8 month emergency fund. Maybe you can find a nice house to rent and sign a two-year lease so that you know you won't have to move again for at least two years. And meanwhile, start socking away more money for your "forever house". Good luck to you!

ETA: $600 is an average middle class house in San Clemente. $400k is probably a decent-sized condo or townhouse.