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How Much
Should You Spend?
Many real estate professionals recommend that your first step in the home buying process be to get
pre-approved for a home loan. When compared to other regions of the country, however, the Bay Area
real estate market is often considered unique, and certainly pricey. Therefore, in my experience it
often helps buyers to determine what type of property they are looking for and calculate what they
are willing to spend. This greatly facilitates zeroing in on the right size loan, which is
essential for getting pre-approved!
At this point, it will be helpful to review your credit report, determine current interest rates,
and do a little math to see what your monthly payment will be. Here are some links to sites that
provide interest rate info and calculators:
Credit Reporting Agencies: Order your credit report from one of the leading credit
information providers:
Equifax,
Experian, or
Transunion.
Mortgage Rates: Everyone knows that interest rates fluctuate regularly. They are
near historic lows right now. These sites will provide useful current rates:
Bloomberg, or
Pacific Guarantee.
Calculators: The Web has many useful tools to calculate monthly mortgage payments, rent
v. buy scenarios, and calculators to answer many other questions. These two Web sites have
excellent and useful calculators:
Quicken, and
Bloomberg.
Tax Considerations: Everyone who buys a home should be interested in the tax benefits. In
nearly all cases, you should consult a tax advisor. However, the following Website will come in
handy when trying to keep the bills from the accountant down. You can do some quick calculations
and review current tax laws on your own at Intuit's
TurboTax site.
Closing Costs: When determining the total amount you want to spend on a home it is important
to consider closing costs. Here are a few links that summarize all the potential closing costs:
Loan Atlas,
Just Homes, or
Real Estate ABC.
Private Mortgage Insurance (PMI): This site contains a lot of information on PMI and your alternatives:
Good Mortgage.
Get Pre-Approved
Pre Approval: Getting pre-approved
for a loan is a necessary step when buying real estate. If you are pre-approved before you begin
looking for a property, you will save considerable time when preparing an offer. You will also know how
much a lender will commit, so you can focus your attention on properties for which you will qualify.
Finally, you will also have a better chance of having an offer accepted if it is accompanied with a
pre-approval letter. There are many excellent mortgage brokers in the area, but I can personally
recommend these two outstanding people:
Richard Wang, Opus Mortgage, (650) 212-0808, richard@opusmortgage.com
Franco Multari, First Horizon, (650) 328-2000, fmultari@fhhloans.com
Online Mortgages: You can also apply online at the following sites:
First Horizon,
Chase,
Washington Mutual,
Wells Fargo, or
Lending Tree.
Choose Neighborhoods
Market Trends: Now that you’re pre-approved it is time to narrow down your search geographically and
decide which neighborhoods most interest you. Take a look at some of the trends impacting the
Bay Area.
Schools: The quality of schools is often an important determinant for home buyers.
Here are some sites to help you evaluate schools on the Peninsula:
Great Schools,
San Mateo County Office of Education, and
Santa Clara County Office of Education.
Home Preferences: I take all of my clients through a home buying preference worksheet.
This way, I can be sure I have captured all of my client’s needs and desires when developing
a list of homes to visit. This worksheet can also help a client rank their most important
priorities when searching for a home. Soon, I will be making this document available online.
Tour Properties
Now the real fun begins. You are ready to start seeing properties!
You can search for properties and open homes on the Peninsula on the
MLS site. It is a Realtor's best
friend. You can find homes for sale all over the Bay Area at the
S.F. Chronicle. If you are looking in or out of the Bay Area, these
sites have listings:
Homes.com,
Home Seekers, and
Yahoo!. If only a
new home will do, these sites have listings:
New Home Network, and
HomeBuilder.
Bidding & Closing
Home Inspection: A home inspection should be done prior to the close of escrow by an
independent inspector. An inspector will search for defects or other problems that may plague
the buyer in the future. The best site for describing the standards of practice for a home
inspection and getting a referral to an inspector in your area is maintained by the
American Society of Home Inspectors.
Title Insurance: A Title Insurance Policy insures that as the new owner, your title for
the property is free and clear of any possible encumbrances, that you have clear title from the
seller, and that you will stand protected from loss or damage as a result of any title defects.
Some possible encumbrances include protection from forged documents, mistakes in public records,
fraud and incorrect property descriptions. A title company will provide a thorough search of the
public records to reveal possible liens, claims or encumbrances against the property. You can get
educated about title insurance at:
Old Republic Title, and
First American Title.
Escrow: An escrow is an arrangement in which a disinterested third party, called an escrow
holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them
according to the buyer's and seller's instructions. You can get more information on escrow
arrangements at:
First American Title, and
Real Estate ABC.
More Guides
If all this isn't enough for you, there are some sites that have compiled a wealth of information
for homebuyers. In particular, I found the following sites useful:
Realty Times, the
Wall Street Journal's home site, and an excellent
site for first time home buyers is put together by
Intuit, the makers of Quicken.
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