How to Buy a House in California

by Warner, Ralph E.; Serkes, Ira; Devine, George; Bray, Ilona M.

• ISBN13: 9781413300673
• ISBN10: 1413300677
• Edition: 10th
• Format: Paperback
• Copyright: 2005-02-28
• Publisher: Nolo

Summary

This bestseller provides effective strategies for buying a house in California's unique real estate market. Home buyers learn how to:- find a house and choose a neighborhood - raise money for a down payment - unearth the best mortgage - take advantage of creative financing techniques, such as private mortgages and probate sales - choose and work with a real estate agent - inspect a house for physical problems and environmental hazards - make an offer and successfully negotiate a contract - go through escrow and take titleProvides detailed advice on how to use the Internet to compare mortgages and apply for a loan, find and screen houses, gather community information and much more.Includes all necessary real estate forms and worksheets, including offer forms and disclosure statements.

Table of Contents

Introduction
House-Buying Worries	p. 2
The Basics of Buying a Good House	p. 2
A Place to Live for Almost Everyone	p. 3
Real Estate Websites	p. 4
How to Use This Book	p. 5
Describe Your Dream House
You Know the House You Want to Buy	p. 2
Don't Be Talked Into Buying the Wrong House	p. 3
Identify Your Ideal House Profile	p. 3
Create a House Priorities Worksheet	p. 6
Prepare a House Comparison Worksheet	p. 8
How Much House Can You Afford?
The Basics of Determining Housing Affordability	p. 2
Prepare a Family Financial Statement	p. 4
How Much Down Payment Will You Make?	p. 9
Estimate the Mortgage Interest Rate You'll Likely Pay	p. 10
Calculate How Much House You Can Afford	p. 10
Tips on Improving Your Financial Statement	p. 13
Get Loan Prepproval	p. 18
Narrowing the Affordability Gap: How to Afford Buying a House
Why California Houses Are Expensive	p. 2
Don't Buy a House at All--Rent and Invest Elsewhere	p. 3
Fix Up the House You Already Own	p. 4
Strategies for Buying an Affordable House	p. 5
Raising Money for Your Down Payment
No and Low Down Payment Plans	p. 3
Five Percent and Ten Percent Down Payment Mortgages	p. 3
Private Mortgage Insurance	p. 3
How Much Should Your Down Payment Be?	p. 6
Using Equity in an Existing House as a Down Payment on a New One	p. 8
Using a Gift to Help With the Down Payment	p. 8
Borrowing Down Payment Money From a Relative or Friend	p. 10
Is It a Gift or Loan? Sometimes It Pays to Be Vague	p. 10
Borrowing From Your 401(k) Plan	p. 11
Tapping Into Your IRA	p. 11
Sharing Equity	p. 11
Substituting a Second Mortgage for a Down Payment	p. 11
Secure Your Loan Using Stock as Collateral	p. 12
Working With Real Estate Professionals
Pros and Cons of Working With a Real Estate Professional	p. 2
Work With a Real Estate Professional Paid by the Seller	p. 6
Hire a Buyer's Broker and Pay the Commission	p. 9
Hire a Broker by the Hour	p. 11
Buy a House Yourself With No Professional Help	p. 12
Finding a Good Agent	p. 12
How Not to Find an Agent	p. 16
Getting Rid of a Broker or Agent You Don't Like	p. 17
How to Find a House
The Best Time to Look for Houses	p. 3
Check the Classified Ads	p. 3
Visit Sunday Open Houses	p. 4
Work With a Real Estate Salesperson	p. 5
Gain Access to the Multiple Listing Service	p. 5
How to Access Homes for Sale on the Internet	p. 6
How Your Real Estate Agent Can Use a Computer to Help You Find a House	p. 7
Enlist the Help of Personal Contacts	p. 7
Do Your Own House Scouting	p. 8
Enlist More Than One Agent to Help You Search	p. 10
Find Foreclosures, Probate Sales and Lease Option Properties	p. 11
Shop via TV	p. 11
Finding a House When You're New to an Area	p. 11
Online Help With Community and Neighborhood Information	p. 12
Finding a New House	p. 12
New Houses, Developments and Condominiums
Pitfalls and Pluses of Buying a New House	p. 2
Choose the Developer, Then the House	p. 3
Using a Real Estate Agent or Broker	p. 4
Financing a New House	p. 5
Optional Add-Ons and Upgrades	p. 6
Choosing Your Lot	p. 8
Restrictions on the Use of Your Property: CCandRs	p. 11
Dealing With Delays	p. 14
Inspect the House Before Closing	p. 14
Guarantees and Warranties	p. 16
Financing Your House: An Overview
How Mortgage Lenders Think	p. 2
Who Lends Mortgage Money?	p. 2
Standardized Loans--Fannie Mae, Freddie Mac and the Secondary Mortgage Market	p. 3
Mortgage Types	p. 3
Comparing Fixed Rate and Adjustable Rate Mortgages	p. 4
Finding the Least Costly Mortgage--Points, Interest Rates and Other Lender Fees	p. 6
What Mortgage Is Best for You?	p. 7
Fixed Rate Mortgages
Should You Choose a Fixed Rate Mortgage If You Can Afford One?	p. 2
Not All Fixed Rate Mortgages Are the Same--Down Payments, Points, Interest Rates and Other Variables	p. 3
Avoid Mortgages With Prepayment Penalties	p. 5
Fixed Rate Mortgages' Lengths and Payment Schedules	p. 5
Most Fixed Rate Loans Aren't Assumable	p. 7
Short-Term Fixed Rate Mortgages With Balloon Payments	p. 7
Two-Step Mortgages	p. 8
Buydown Mortgages--The Seller Subsidizes Your Payments	p. 8
Adjustable Rate Mortgages
Are ARMs a Decent Consumer Choice?	p. 2
Loan and Payment Caps	p. 4
Negative Amortization	p. 4
ARM Indexes and Margins	p. 6
Assumability	p. 6
Prepayment Penalties	p. 7
Hybrid Adjustable Rate Mortgage	p. 7
Summing Up--What Good ARMs Look Like	p. 7
Government-Assisted Loans
Veterans Affairs Loans	p. 2
Federal Housing Administration Financing	p. 4
California Housing Finance Agency Programs	p. 6
Cal-Vet Loans	p. 7
Municipal Financing Programs	p. 9
Private Mortgages
Get a Loan From Friends or Relatives	p. 2
Shared Equity Transactions	p. 6
Second Mortgages--Financing by Sellers	p. 6
Second Mortgages--Financing by Private Parties Other Than the Seller	p. 8
Obtaining a Mortgage
Gather Information on Mortgage Rates and Fees	p. 2
Shopping for a Mortgage Online	p. 3
Work With a Loan Broker	p. 4
Interview Lenders	p. 5
Complete the Mortgage Rates and Terms Table	p. 6
Apply for and Get a Loan	p. 11
Get Your House Appraised	p. 13
Buying a House When You Already Own One
Check the Housing Market Carefully	p. 2
Bridge Financing: How to Own Two Houses Briefly	p. 6
Tax Breaks for Selling Your Home	p. 7
How Much Will You Offer?
How a Contract Is Formed	p. 2
Decide How Much You Will Offer	p. 2
What Is the Advertised Price?	p. 2
How Much Can You Afford?	p. 3
What Are Prices of Comparable Houses?	p. 3
Is the Local Real Estate Market Hot or Cold?	p. 5
Is the House Itself Hot or Cold?	p. 7
What Are the Seller's Needs?	p. 8
Is the House Uniquely Valuable to You?	p. 8
How Much Are You Willing to Pay?	p. 9
Making the Final Decision	p. 9
Putting Your Offer in Writing
What Makes an Offer Legally Valid?	p. 2
Offer Form Terminology	p. 2
How to Fill Out the Contract to Purchase Real Property Form	p. 3
Presenting Your Offer and Negotiating
State Your Intent to Make an Offer	p. 2
Present Your Offer	p. 3
Bid on Two or More Houses	p. 4
Pick a Negotiator	p. 4
The Seller's Response to Your Offer	p. 7
Negotiate by Counteroffers	p. 13
An Offer Is Accepted--A Contract Is Formed	p. 13
Revoking an Offer or Counteroffer	p. 14
Making a Backup Offer	p. 14
After the Contract Is Signed: Escrow, Contingencies and Title Insurance
Open Escrow	p. 2
Remove Contingencies	p. 5
Obtain Hazard Insurance	p. 11
Obtain Title Report and Title Insurance	p. 13
Conduct Final Physical Inspection of Property	p. 15
Closing Escrow	p. 15
Check Out a House's Condition
Short History of California House Inspections	p. 2
Real Estate Transfer Disclosure Statement	p. 2
Natural Hazard Disclosure Statement	p. 9
Earthquake and Seismic Disclosures	p. 9
Environmental Hazards	p. 11
Lead	p. 11
Disclosure of Deaths and/or AIDS	p. 12
Disclosure of Military Ordnance	p. 12
Local Disclosures	p. 12
Inspecting the Property Yourself	p. 12
Arranging Professional Inspections	p. 13
Are the Repairs Really Needed?	p. 18
Who Pays for Defects?	p. 19
Ask for a Home Warranty	p. 20
Legal Ownership: How to Take Title
One Unmarried Person	p. 2
Two or More Unmarried People	p. 2
Married Couple Owning Together	p. 4
Married Person Owning Alone	p. 7
Partnership	p. 8
Placing the Property in a Living Trust	p. 8
If Something Goes Wrong During Escrow
The Seller Backs Out	p. 2
The Seller Refuses to Move Out	p. 2
You Back Out	p. 3
The Seller Dies	p. 3
You Discover a Defect in the Property	p. 3
The House Is Destroyed by Natural Disaster (Fire, Earthquake, Flood)	p. 4
House-Hungry Martians Take Possession of the House	p. 4
Finding a Lawyer	p. 4
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