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Want to Buy in Cali Bay Area

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Want to Buy in Cali Bay Area

We are wanting to purchase a home in the Bay Area (Santa Clara County) where the median home price is 1.2 million. We plan to try to purchase in 2021. My question is it possible to get financing for a home priced above without putting 10-20% down? We have little savings as we used it to pay off some debts. Of course we plan to save more over this year. DTI 19% FICO 8 scores are 730, 738, 721. Income is over $200,000.
We do have rsus that vests monthly.
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Valued Contributor

Re: Want to Buy in Cali Bay Area

Please get Mortgage FICO score (2,4, & 5) FICO 8 scores are totally useless. And you need scores for both borrowers. You can get them on this website.
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Re: Want to Buy in Cali Bay Area

Yup, there are jumbo loan programs with no PMI that allow you to purchase with just 5% down up to a $1,500,000 loan amount with a 680 credit score, although for a good goal I'd aim for 760 as there are hits to the rate for scores below that.  Having 6 to 9 months of the proposed PITI payment in reserves will help improve interest rates too.

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Re: Want to Buy in Cali Bay Area

Thanks for the reply.  

 

Just trying to wrap our head around taking out a mortgage for so much.  

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Re: Want to Buy in Cali Bay Area

You have a second factor to consider in a market like SF/San Jose: competition.

 

If you are reliant on a mortgage in those markets, you already are at a disadvantage as there are a lot of all-cash offers being placed on homes. Some sellers won't care a lot, but many will lean toward the cash offers because they can come in with no contingencies. If a seller receives 3 offers on their home, one for $1.2 million cash with an inspection contingency, one for $1.21 million with a mortgage contingency (which also means inspection/appraisal that the bank has to be ok with), and a cash offer for $1.19 million with no contingencies, the mortgage offer is the least attractive of the three despite being the highest offer.

 

Not trying to scare you off, but you should make sure you have everything ready to go well in advance of placing any offers and be prepared to be at it a while. The usual home-buying rules that most of the country follows get changed up in the hot tech and finance cities where there's loads of investors and wealthy buyers clamoring for limited supply. Of course, you can still do an all-cash offer with a mortgage, but you're assuming 100% of the risk and if that financing falls through you've got a problem on your hands.

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Re: Want to Buy in Cali Bay Area


@iced wrote:

You have a second factor to consider in a market like SF/San Jose: competition.

 

If you are reliant on a mortgage in those markets, you already are at a disadvantage as there are a lot of all-cash offers being placed on homes. Some sellers won't care a lot, but many will lean toward the cash offers because they can come in with no contingencies. If a seller receives 3 offers on their home, one for $1.2 million cash with an inspection contingency, one for $1.21 million with a mortgage contingency (which also means inspection/appraisal that the bank has to be ok with), and a cash offer for $1.19 million with no contingencies, the mortgage offer is the least attractive of the three despite being the highest offer.

 

Not trying to scare you off, but you should make sure you have everything ready to go well in advance of placing any offers and be prepared to be at it a while. The usual home-buying rules that most of the country follows get changed up in the hot tech and finance cities where there's loads of investors and wealthy buyers clamoring for limited supply. Of course, you can still do an all-cash offer with a mortgage, but you're assuming 100% of the risk and if that financing falls through you've got a problem on your hands.


With the age of many of the bay area homes (whenever I casually look through Redfin as I was when I was at least considering that SF bank's offer most recently) are there really people who are waiving the inspection contingency?

 

Or are they just assuming there's going to be some amount of rework (statistically over a large enough sample size there's got to be some average that can be factored in) or complete rebuild anyway and as such just waive it?

 

I do wonder how long the Bay Area real estate market will continue to levitate though, more and more companies don't care if I live in LA and work remote, and if they're there they're probably to the point of letting people in the mid-west or elsewhere far cheaper work too as long as they can make it out for one week out of 4 or whatever.

 




        
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Re: Want to Buy in Cali Bay Area


@Revelate wrote:


With the age of many of the bay area homes (whenever I casually look through Redfin as I was when I was at least considering that SF bank's offer most recently) are there really people who are waiving the inspection contingency?

 

Or are they just assuming there's going to be some amount of rework (statistically over a large enough sample size there's got to be some average that can be factored in) or complete rebuild anyway and as such just waive it?

 

I do wonder how long the Bay Area real estate market will continue to levitate though, more and more companies don't care if I live in LA and work remote, and if they're there they're probably to the point of letting people in the mid-west or elsewhere far cheaper work too as long as they can make it out for one week out of 4 or whatever.

 


I admittedly cannot speak specifically to SF's housing as I haven't looked there, but I have been active in Boston and looked at NYC, both markets that are similarly hot (though if you believe the reports, not quite as hot as SF/SJO). In both of those markets, the housing is actually older than what's in the bay area and it does indeed occasionally go with waived contingencies, even inspection. Whatever each buyer's reason is, I can't say.

 

What I can tell you is that I have attended more than one open house where the RE's greeting was along the lines of "hello, have a look around, all offers due by 5:00 on Monday, no contingencies will be accepted.". I have spoken to people who have sold their units and the number of offers, including all-cash with no contingencies, that they received. The neighbor we share a wall with sold their place in 2017 for $103,000 over asking price in 6 days. Multiple offers. FWIW, our two buildings are amongst the newest on our block, having been built in the 1890s, but still older than almost everything in SF given it burned to the ground in 1906.

 

Reports as of late are saying the market is slowing, but the reason appears to be because the supply has been exhausted and there's so little on the market that it's depressing the numbers. I'm seeing homes stay on the market a little bit longer, but the ones that are are usually north of $1.7 million; the cheaper stuff (under $1.5 million) in the inner neighborhoods are gone pretty much right after they hit the market. If we're seeing this sort of insanity here, and SF is the accepted pinnacle of insanity for housing in the US, I have to assume they're getting it even worse than we are.

 

A bit dated, but this article sums up how things have been over here the last few years: http://realestate.boston.com/buying/2016/04/13/top-broker-warns-boston-area-home-buyers-stop-making-...

 

Your telecommuting scenario is quite common, and employers are starting to offer workspaces in other parts of the country. Those areas are themselves starting to see real estate prices explode as the waves of coastal money floods in and drives prices out of reach of the locals.

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Re: Want to Buy in Cali Bay Area


@Revelate wrote:


With the age of many of the bay area homes (whenever I casually look through Redfin as I was when I was at least considering that SF bank's offer most recently) are there really people who are waiving the inspection contingency?

 

Or are they just assuming there's going to be some amount of rework (statistically over a large enough sample size there's got to be some average that can be factored in) or complete rebuild anyway and as such just waive it?

 

I do wonder how long the Bay Area real estate market will continue to levitate though, more and more companies don't care if I live in LA and work remote, and if they're there they're probably to the point of letting people in the mid-west or elsewhere far cheaper work too as long as they can make it out for one week out of 4 or whatever.


When I bought a house in the SF Bay Area, almost all the sellers have pre-listing inspection info available at the open house.  Most buyers do their own inspection, but some just trust the seller's inspection. Obviously, those who plan to tear down won't care.  

 


@iced wrote:

I admittedly cannot speak specifically to SF's housing as I haven't looked there, but I have been active in Boston and looked at NYC, both markets that are similarly hot (though if you believe the reports, not quite as hot as SF/SJO). In both of those markets, the housing is actually older than what's in the bay area and it does indeed occasionally go with waived contingencies, even inspection. Whatever each buyer's reason is, I can't say.

 

What I can tell you is that I have attended more than one open house where the RE's greeting was along the lines of "hello, have a look around, all offers due by 5:00 on Monday, no contingencies will be accepted.". I have spoken to people who have sold their units and the number of offers, including all-cash with no contingencies, that they received. The neighbor we share a wall with sold their place in 2017 for $103,000 over asking price in 6 days. Multiple offers. FWIW, our two buildings are amongst the newest on our block, having been built in the 1890s, but still older than almost everything in SF given it burned to the ground in 1906.

 

Reports as of late are saying the market is slowing, but the reason appears to be because the supply has been exhausted and there's so little on the market that it's depressing the numbers. I'm seeing homes stay on the market a little bit longer, but the ones that are are usually north of $1.7 million; the cheaper stuff (under $1.5 million) in the inner neighborhoods are gone pretty much right after they hit the market. If we're seeing this sort of insanity here, and SF is the accepted pinnacle of insanity for housing in the US, I have to assume they're getting it even worse than we are.

 

A bit dated, but this article sums up how things have been over here the last few years: http://realestate.boston.com/buying/2016/04/13/top-broker-warns-boston-area-home-buyers-stop-making-...

 

Your telecommuting scenario is quite common, and employers are starting to offer workspaces in other parts of the country. Those areas are themselves starting to see real estate prices explode as the waves of coastal money floods in and drives prices out of reach of the locals.


I personally prefer this kind of straightforward real estate transaction -- turn in your best and final offer by the deadline -- as in SF and Manhattan.  It's a hell of a lot less frustrating than dealing with Seattle's escalation clauses.  It does require quick decisions and enough money to beat the other offers.  

 

The cooling in the Manhattan market is the result of a combination of things: a glut of new construction units coming on the market, the limit in SALT deduction, and increased mansion tax (ha!) on any purchase over $1M (the taxes can add up; we paid several hundred thousand in closing costs).

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