How to Buy a House in California

1. Describe Your Dream Home

• You Know the House You Want to Buy
• Don’t Be Talked Into Buying the Wrong House
• Identify Your Ideal House Profile
• Create a House Priorities Worksheet
• Prepare a House Comparison Worksheet

2. How Much House Can You Afford?

• The Basics of Determining Housing Affordability
• Prepare a Family Financial Statement
• How Much Down Payment Will You Make?
• Estimate the Mortgage Interest Rate You’ll Likely Pay
• Calculate How Much House You Can Afford
• Tips on Improving Your Financial Profile
• Get Loan Preapproval

3. Narrowing the Affordability Gap: How to Afford Buying a House

• Why California Houses Are Expensive
• Don’t Buy a House at All—Rent and Invest Elsewhere
• Fix Up the House You Already Own
• Strategies for Buying an Affordable House

4. Raising Money for Your Down Payment

• Assisted No and Low Down Payment Plans
• Five and Ten Percent Down Payment Mortgages
• Private Mortgage Insurance
• How Much Should Your Down Payment Be?
• Using Equity in an Existing House as a Down Payment on a New One
• Using a Gift to Help With the Down Payment
• Borrowing Down Payment Money From a Relative or Friend
• Is It a Gift or a Loan? Sometimes It Pays to Be Vague
• Borrowing From Your 401(k) Plan 6
• Tapping Into Your IRA
• Sharing Equity
• Getting a Second Mortgage From the Seller
• Secure Your Loan Using Stock as Collateral

5. Working With Real Estate Professionals

• Advantages and Disadvantages of Working With a Real Estate Professional
• Work With a Real Estate Professional Paid by the Seller
• Hire and Pay an Exclusive Buyer’s Agent
• Hire an Agent by the Hour
• Buy a House Yourself With No Professional Help
• Finding a Good Agent
• How Not to Find an Agent
• Getting Rid of a Broker or Agent You Don’t Like

6. How to Find a House

• The Best Time to Look for Houses
• Where to Look for Houses
• Use an Agent With Good Skills
• Enlist the Help of Personal Contacts
• Finding a House When You’re New to an Area
• Online Help With Community and Neighborhood Information
• Finding a Newly Built House

7. New Houses, Developments, and Condominiums

• Pitfalls and Pluses of Buying a New House
• Choose the Developer, Then the House
• Using a Real Estate Agent or Broker
• Financing a New House
• Optional Add-Ons and Upgrades
• Choosing Your Lot
• Restrictions on the Use of Your Property: CC&Rs
• Dealing With Delays
• Inspect the House Before Closing
• Guarantees and Warranties

8. Financing Your House: An Overview

• How Mortgage Lenders Think
• Who Lends Mortgage Money?
• Standardized Loans: Fannie Mae, Freddie Mac, and the Secondary Mortgage Market
• Mortgage Types
• Comparing Fixed Rate and Adjustable Rate Mortgages
• The Cost of Getting a Loan
• Which Mortgage Is Best for You?

9. Fixed Rate Mortgages

• Should You Choose a Fixed Rate Mortgage If You Can Afford One?
• Not All Fixed Rate Mortgages Are the Same: Down Payments, Points, Interest Rates, and Other Variables
• Mortgages’ Lengths and Payment Schedules

10. Adjustable Rate Mortgages

• When Should You Finance With an ARM?
• Loan and Payment Caps
• ARM Indexes and Margins
• Assumability
• Prepayment Penalties
• Hybrid Adjustable Rate Mortgage
• Summing Up—What Good ARMs Look Like

11. Government-Assisted Loans

• Veterans Affairs Loans
• Federal Housing Administration Financing
• California Housing Finance Agency Programs
• Cal-Vet Loans
• Municipal Financing Programs

12. Private Mortgages

• Advantages of Private Mortgages
• Get a Loan From Friends or Relatives
• Shared Equity Transactions
• Second Mortgages—Financing by Sellers
• Second Mortgages—Financing by Private Parties Other Than the Seller

13. Obtaining a Mortgage

• Gather Information on Mortgage Rates and Fees
• Researching Mortgages Online 162 Work With a Loan Broker
• Interview Lenders
• Apply For and Get a Loan
• Get Your House Appraised

14. Buying a House When You Already Own One

• Check the Housing Market Carefully
• Bridge Financing: How to Briefly Own Two Houses
• Tax Breaks for Selling Your Home

15. What Will You Offer?

• How a Contract Is Formed
• Decide What You Will Offer
• What Is the Advertised Price?
• How Much Can You Afford?
• What Are Prices of Comparable Houses?
• Is the Local Real Estate Market Hot or Cold?
• Is the House Itself Hot or Cold?
• What Are the Seller’s Needs?
• Is the House Uniquely Valuable to You?
• How Much Are You Willing to Pay?
• Making the Final Price Decision
• Other Ways to Make Your Offer Attractive

16. Putting Your Offer in Writing

• What Makes an Offer Legally Valid
• How Offers and Counteroffers Are Made
• What Your Purchase Agreement Should Cover

17. Presenting Your Offer and Negotiating

• Notify the Seller of Your Offer
• Present Your Offer
• Bid on Two or More Houses
• The Seller’s Response to Your Offer
• Negotiate by Counteroffers
• An Offer Is Accepted—A Contract Is Formed
• Revoking an Offer or Counteroffer
• Making a Backup Offer

18. After the Contract Is Signed: Escrow, Contingencies, and Insurance

• Open Escrow
• Remove Contingencies
• Obtain Hazard Insurance
• Obtain Title Report and Title Insurance
• Conduct Final Physical Inspection of Property
• Closing Escrow

19. Check Out a House’s Condition

• Short History of California House Inspections
• Real Estate Transfer Disclosure Statement
• Natural Hazard Disclosure Statement
• Earthquake and Seismic Disclosures
• Environmental Hazards
• Lead
• Disclosure of Deaths and/or AIDS
• Disclosure of Military Ordnance
• Local Disclosures
• Inspecting the Property Yourself
• Arranging Professional Inspections
• Are the Repairs Really Needed?
• Who Pays for Defects?
• Ask for a Home Warranty

20. Legal Ownership: How to Take Title

• One Unmarried Person
• Two or More Unmarried People
• Couple or Domestic Partners Owning Together
• Married Person Owning Alone
• Partnership
• Placing the Property in a Living Trust

21. If Something Goes Wrong During Escrow

• The Seller Backs Out
• The Seller Refuses to Move Out
• You Back Out
• The Seller Dies
• You Discover a Defect in the Property
• The House Is Destroyed by Natural Disaster (Fire, Earthquake, Flood)
• House-Hungry Martians Take Possession of the House
• Finding a Lawyer

A. Welcome to California

• Climate and Geography
• Natural Hazards
• Pollution
• Nuclear Plants
• Schools
• Traffic
• Crime
• Additional Information on California

B. Real Estate Websites

• Top Real Estate Websites
• California Online
• General Real Estate Sites
• How to Find a California Statute Online

C. Planning Your Move

• Tax-Deductible Moving Expenses and Costs of Sale
• Moving Checklist: Two Weeks Before Moving
• Things to Remember While Packing
• Who Should Get Changes of Address
• Things to Do After Moving In

D. Forms

• Ideal House Profile
• House Priorities Worksheet
• House Comparison Worksheet
• Family Financial Statement
• Directions for Completing the Family Financial Statement

Index