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2022-06-15 12:03:10 By : Mr. SUN SUN

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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.

The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.

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Whether you’re looking for the peace and quiet of northern California or the hustle and bustle of an urban environment like San Diego or Los Angeles, the Golden State offers something for everyone. However, becoming a homeowner here can feel daunting: The state consistently ranks as one of the most expensive places in the U.S. to live. Buying a home here is possible, though. If you’ve been California dreaming, here’s a look at how to approach the home buying process in the Golden State.

California is huge: 163,695 square miles, to be exact, according to Census data. So, if you aren’t set on a specific location yet, take a long look at the map. Does the ocean air appeal to you, or are you looking to spend time in the desert sun? Do you need the space of a single-family home, or will a smaller condo meet your needs? Redwood trees and hiking trails, or a man-made skyline and loads of people? Ask yourself the critical questions about what you need for your lifestyle.

What you want isn’t the only consideration — you’ll also need to think about how much it will cost you. The cost of a house will certainly play a major role in that math, but there are other regular expenses you’ll need to consider: How much groceries cost, how much you’ll spend to fill up your gas tank and more. Use Bankrate’s Cost of Living Calculator to understand how much money you’ll need to earn to maintain a good quality of life in any of the major California metro areas.

To determine the best places to live in California, take a look at where the data points. While Sacramento took the top spot on Bankrate’s most recent list, smaller cities might fit your needs, too. Once you’ve narrowed your searches to specific areas, you’ll want to consider suburbs and neighboring towns that might offer access to the attractions you want at a lower price point.

Speaking of price point, this is the foundation of your work to buy a house in California. Use Bankrate’s Home Affordability Calculator to figure out how much you can comfortably spend to purchase a home. Remember, the key word here is “comfortably.” If you stretch yourself too thin, you run the risk of too much financial stress to enjoy your new home.

Every real estate market is different. As you begin looking at California homes, keep these things in mind.

The good news about home prices in California: They aren’t rising as quickly as they are in many other places around the country. Data from the California Association of Realtors shows that the median home price increased by less than 9 percent between April 2021 and April 2022. The bad news: Prices were already really high. The median home price in California was $884,890 as of April 2022.

Because home prices are so high here, many homebuyers need to borrow money that exceeds the limits put in place by the Federal Housing Finance Agency. With that in mind, you might need to compare California’s jumbo loan limits instead of conventional mortgage rates. It’s important to note that jumbo loans tend to come with stricter borrower requirements, including a larger minimum down payment and a higher credit score.

As you do the math to figure out how much you can afford to spend, think about all your other expenses to come up with a ballpark figure for your housing budget. And while you’re at it, look for ways to save money, too.

If you’re wondering whether you should buy a house now or wait, the reality is that home prices rarely go down. They will likely rise at a slower rate in the near future, but don’t expect buying in California to get much easier. So, think about a few key questions. Do you plan to stay in California for a while? Is your rent going up? Is your credit score good? If you can afford a down payment and you are confident that California feels like home, buying a house is a wise investment.

The down payment is often the most prohibitive cost standing in the way of buying a house in California. However, you might be able to qualify for assistance with the expense.

If you’ve never owned a home before or if you haven’t owned a home within the last three years, the California Housing Finance Agency considers you to be a first-time homebuyer. California can be tough for first-time buyers, but that status might put you in line for a low interest mortgage program and/or a deferred loan for your down payment — all part of California’s first-time homebuyer programs. You’ll need to earn less than the state’s income limits and satisfy a range of other requirements, including completing a homebuyer education course.

There are plenty of down payment assistance programs, too, many of which are available even if this isn’t your first home. Most programs are geared toward buyers who earn under a certain threshold of money each year, offering low- and moderate-income individuals a way to buy a home. For example, Redding, Pittsburg, Modesto and La Mesa are some of the cities with options to help buyers manage their upfront expenses.

If you can manage to make a bigger down payment, you can lower the amount of money you need to borrow — thus reducing interest charges over the long-term, lowering your monthly payments and potentially helping you avoid mortgage insurance premiums. For example, let’s say you’re thinking about putting down 5 percent on a $750,000 home ($37,500). If you are able to double your down payment to 10 percent ($75,000), your monthly payments will be $190 less, and you’ll save nearly $31,000 over the life of the loan.

Getting preapproved for a mortgage is a crucial piece of buying a house in California. It shows that a lender has done a preliminary review of your finances and is likely to loan you a certain amount (the preapproval will include the amount and your terms) to buy a home. Many lenders can issue you a preapproval letter online. It’s an important piece of proving to sellers that you are a qualified buyer. In competitive markets — which certainly describes many cities in the state — a preapproval can give your offer more weight.

You don’t necessarily have to get your mortgage through the same company that offers you a preapproval. In fact, you will want to compare multiple lenders to determine who can give you the best rate. Start by looking at the best lenders in California, and keep in mind that some lenders specialize in certain programs. For example, borrowers looking for FHA loans will have a completely different set of needs versus borrowers who need jumbo loans.

Your lender helps you get the money you need, but you’re going to need some assistance finding where to spend it. Working with a real estate agent can help you navigate the challenges of being a buyer — local pros know where to look based on your budget and how much to offer. They sometimes even know about homes before they’re listed for sale.

It’s time to start browsing listings and checking out open houses. Know what you absolutely must have in a home versus what kind of compromises you’re willing to make. If you can start your search with an understanding of where you can sacrifice, you can avoid major frustrations. Once you’ve made an offer on a home and it’s accepted, work to complete all the necessary work for your mortgage application.

This is one of the biggest financial decisions you’ll ever make, so it’s important to verify two key components: that the house is in good shape and that it’s worth what you’re paying. If you’re getting a mortgage, you’ll have to get an appraisal; the lender will require it to make sure that the property’s valuation is in line with the amount of money you’re borrowing. A home inspection is optional, and some buyers waive the inspection to make their offer more appealing. But it’s highly encouraged: A professional home inspector can identify issues that might be hiding beneath the surface — plumbing or electrical issues, for example — and save you a big headache later.

Finally, you’ll have one last visit to the home before you officially own it. Your final walk-through will likely happen just before you head to the closing. Make sure that the home is in good condition, that the owner has removed all their belongings and that the property is free of issues that could cause you back out of the agreement.

You’re almost there. Be sure to ask what type of payment is accepted for all your closing costs, as you’ll likely need to go get a certified check or a cashier’s check. Then, when closing day arrives, be sure to bring the proper identification, and be ready to sign a mountain of paperwork. Once you’ve completed all the necessary work, the keys are yours. Congratulations — you now own a piece of California.

It all depends on your finances. California makes a great home, if you can afford the monthly payments without adding financial stress to your life. The state has stunning ocean views, challenging mountain hikes and tranquil desert towns. Plus, buying a home in California isn’t just about what it can do for you now — it’s about what the investment will mean in the future. According to data from RenoFi, average California home prices will top the $1 million valuation mark in 2030. So, if you buy today, you may be able to enjoy some healthy appreciation over the coming years.

As you begin looking to buy a home in California, here are three key facts to help set the stage.

That depends on where exactly in the Golden State you want to live. If you’re looking to chase Hollywood dreams and beach access in Los Angeles or the big-city energy of San Francisco, you’re looking at a steep price tag. However, in an inland market like Fresno, you’ll need a lot less cash. The median sale price there is an affordable $386,000, according to data from Redfin.

You don’t necessarily need 20 percent of the purchase price in your savings account to buy a house in California — or anywhere in the country, for that matter. FHA loans will allow a down payment as small as 3.5 percent, and some conventional loans will accept down payments as low as 3 percent. If you qualify for a VA-backed or USDA-backed loan, you may even be able to buy a home without contributing any money to your down payment.

Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.

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