[This is part of a series of posts on the home buying process I'm going thru. To see the full set, visit the house category archives.]
I headed over to Los Altos on Tuesday morning to meet my realtor for the first time. What I expected to be a 40 minute "get to know each other" meeting ended up being 2 hours and 15 minutes of productivity.
We started with the basics of home buying in California and Santa Clara County specifically. It's quite a bit different than, say, Ohio. The disclosure requirements for sellers are much higher here. Sellers bear a lot more of the expense here, but that varies on a county by county basis. If I were to move up the peninsula into San Mateo County, the tables are turned.
Very funky.
We talked a bit about the overall costs. One thing I've been trying to get a feel for is how much cash will out of my virtual pocket to cover all the miscellaneous fees, taxes, and other crap that comes along with acquiring a home and the loan to pay for it. She estimated about $5,000 - $6,000 in my price range.
Good to know.
After all that, we talked a bit more about what I wanted and how high I was willing to go on price. In the days leading up to our meeting, I'd been working with slightly modified version of Nelson's handy spreadsheet to gauge how much I want to spend. I'm using the post-tax-benefit monthly cost as my guide. I don't want to go too far over $2,000 per month.
Using that as a rough guide, that means I can go as a high as a $575,000 purchase price.
So what does half a million dollars (it sounds like a lot when I say it that way) buy in Mountain View or Sunnyvale?
To answer that question, we hopped on the computer and played with various searches against the MLS database. We spent a lot of time doing this, selecting properties, and discussing the good and bad points of each--based solely on the data in the listing. That was very helpful, because I got to learn about how proximity to major highways affects price (it gets a bit lower if you're near enough to hear or see the traffic) and how the various school districts affect home resale value. There's an interesting west to east decrease as you move from Los Altos to Mountain View, Cupertino, Sunnyvale, and so on. The school districts (in general) seem to go from very attractive to less attractive as you follow that progression.
Anyway, using searches in the $400,000 - $575,000 range, I learned that my dreams of a 3 bed, 2 bath condo or townhouse with at least 1,300 square feet and a 2 car attached garage is realistic.
I also brought home a ton of paperwork to look: info about my realtor, her company, typical expenses, tax schedules, sample home sale contracts, and so on. I have much to read.
Next up: My Thursday visit with the loan guy.
Posted by jzawodn at January 16, 2004 08:14 AM
Jeremy, this is great stuff, especially for those of us who likely will be following in your footsteps in the next year or two. Thanks for doing this.
Derek
Most financial calculators on the web are pretty basic, and pretty clumsy for calculating various "what-if" scenarios.
However I found the suite of free calculators at:
http://www.dinkytown.net/ to be especially good. They were a big help when it came to points vs. rate, various ARMs vs. Fixed rates, early payments, etc.
I see that spreadsheet includes a line item for property taxes... don't underestimate their magnitude in the $$$/month figure. Where I live the amount I pay into escrow each month is MORE than my mortgage payment by a significant amount.
Be happy you do not live in NYC. For $575,000 here you would get, maybe, a 2 bedroom and about 1000 square feet. Not too mention that is an apartment. No grass, no garage and your view will be of the building across the street.
I'm in the process of thinking of moving from my one bedroom to a 3 bedroom here in the city and the prices are just absolutely out of control.
You need to go over 100 miles in any direction out from Manhattan to find anything at a somewhat 'normal' price.
Good luck in the house hunting...it is a great experience for sure.
I always figured there'd be a lot of telecommuters in Silicon Valley. No?
Is that $2k/month for mortgage or everything? Don't forget HOA fees. Figure anywhere $50-300/month, I'd guess. ~$7K tax, $1k insurance. Right there you're talking $500-700/month after tax.
$5-6k closing costs seems way too high. Under $2k would be a good deal.
Rick:
That $2k/month ballpark figure does include HOA fees and an uspecified downpayment. But it's a ballpark figure since I'm working in a decent range. What's likely to happen is that my downpayment will be adjusted to bring the monthly expenses down to something I'm happy with.
Perhaps when things are more settled (and I've double-checked it with the tax guy--that happens Monday morning) I'll post the spreadsheet I'm using.
I'm working on getting itemized closing costs next week or so. Interestingly, the figures I got from the loan guy were a bit lower, and I'm inclined to believe that. I think the realtor was making a big approximation.
You did me a favor. I jumped over to eloan to check some numbers and saw rates were down again, so decided to refi to a 15yr 5.25% no cost (from 30yr 5.75). 2nd refi since we moved into this house a year ago. Last one dropped the rate from 6 _and_ I walked away with $3k. Sorry Countrywide. Actually, it'll be funny if this is a Countrywide loan too since the last refi was from Countrywide to Countrywide.
You might consider picking up a few issues of the Mountain View and Sunnyvale newspapers, and looking at the police blotter. There are distinct higher crime areas in both cities. (They tend to be near large blocks of "transient" apartments.)
