How to Finance an Expensive Home in Places like California: Conventional or VA Financing

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Buying a home is already the most expensive and biggest move you will ever make, so buying one in an expensive location can be challenging!

Don’t fret. There are ways to do it.

Get a sense of the probable locations in the state you are interested in – check the internet, ask your friends, read the papers, talk to the local planning department.

This is especially helpful if you plan to move to a state as big as California.

Know your priorities-

Chances are, you will find that there’s a gap between your dream house and your wallet and sometimes it’s too big to just ignore. Make sure that the house meets your priorities and learn to let go of less important features that you probably would not need.

Ask yourself questions like: would I really need six bathrooms for a family of four?

Is that extra two rooms necessary?

Do I want peace and quiet?

Would I prefer a home that’s near a school?

Set a limit on the house-

List a good price range for the house that will meet your needs and include the maximum downpayment you can afford. This way, it is easier for you to narrow your choices while taking note of your finances.

Do your research also on some restrictions and conditions typical to the building or neighborhood. Details like landscaping and house color may not seem like a big deal to you, but in some areas, they are regulated. Check also on earthquake and flood-prone areas.

The professional designer’s touch-

Some houses come in a package that’s been professionally designed. A fresh coat of paint, flowers in the hallway, sparkling clean kitchens are attractive draws for potential homebuyers. There could even be music and lighted fragrant candles.

Don’t be blinded by this set up. Look for yourself and imagine your furniture and belongings in it. A house could be charmed up and made to look bigger by strategically placing small-sized furnishings in the right places.

Once you’re set on a house, consider how you’ll pay. There are several loan choices available for you when buying a house. What you choose will depend on your affordability. If you plan to retire in the house, then an ARM would be a wise loan arrangement for you. But if you have plans of moving after a few years, then…

Try an interest-only mortgage-

As prices rise, especially in California, borrowers have begun turning to interest-only mortgages. With an interest-only mortgage, a homeowner with a $500,000 loan on a 30-year term and 5.5% rate will only pay a little over $2,200 a month. A fixed loan will require about $2,800. That is a savings of $500 per month.

When an interest-only loan gets converted to an ARM after five years, the homeowner will have saved more than $30,000. An interest-only loan is also a good choice for you if you have a good credit standing, you only plan to stay in the house for a few years or are planning to refinance before the end of the interest-only period.

Use your VA Benfits if you qualify-

With a VA Loan you can get a mortgage with no money down. Even if property values in your area are higher, a VA Loan can finance 100% of a mortgage up to $417,000 (with some restrictions). There are no out of pocket expenses for you. Due to the competitive nature of VA Loans the interest rates are generally very good.

If you have credit problems you can still get a VA Loan. Again with a better interest rate that you can find on the open market. The process is straight forward; be sure you qualify, and you can get into a home much easier than you expect.

For more information about a VA Loan check out this excellent free report: Guide to VA Financing

If you choose to build, why not go modular?

Modular homes are quite popular and they can save you money. They are also more appropriate for mid- to high-ranged locations. Ironically, they do not save as much in less expensive areas because of material transport costs.

Modular homes are factory-built and can be assembled on site. The building materials are at par and the finished product is no different from other more conventionally-built houses. They are also faster to build. It would take about six to seven months for a modular home to be constructed, beginning at the design phase until it’s time for you to move in, so it’s pretty fast.

Furthermore, modulars can be custom-built, so don’t worry about not having enough choice in design. They are also cost-friendly, priced at less than $100 per square foot so it’s possible for you to have a nice house for under $200,000.

California and other western states have already adopted modular home construction so worry not about manufacturers because they know this and can build in these areas following standards and requirements. For quality, affordability and speed, modular homes are a great choice.

Consider the Architect cost-

Architects can help you get the house of your dreams that’s as unique as your vision, but one-of-a-kind designs are costly and especially if land sizes have shrunk. A typical architect would charge from 5 to 15% of the construction cost of a house designed just for you. So for a house that costs $500,000 (excluding the cost of land), the fees could be from $25,000 to $75,000.

If you’re up to it, why not choose a pre-designed plan for your house? It’s not only less expensive, there are also plenty of designs to choose from so aesthetics is not really a concern.

There are ways to buy an expensive house in a very nice location. You just have to know exactly what your working limits are and the options you have to get a hold of the house of your dreams.

Source by John G. Edwards

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