Every state has slightly different real estate laws, which makes buying a home a little bit difficult. In California, buyers need to be aware of certain requirements before making a purchase.
This blog covers the essentials of what you need to know when considering a home purchase in California.
California’s housing market
When it comes to real estate, location is the first thing that matters. We want trendy neighborhoods, but local laws and regulations also need to be taken into consideration. Zoning laws, for instance, limit your ability to add to your home later. So, if you have plans to expand, first check the local zoning codes before making an offer.
The California region is also prone to climate issues like wildfires, floods, and earthquakes. This not only affects the property prices but also the insurance costs.
Properties in high-risk areas face higher premiums, and even if you manage to secure insurance, you may find it harder to finance your purchase.
Legal and environmental hurdles
Zoning restriction policies and environmental laws are the last thing a buyer thinks about. But, they are very important. California has strict zoning laws that decide what you’re allowed to do with your property. For example, if you hope to build ADU in the future, confirm if the area allows it.
Earthquake retrofitting is another thing many people overlook. Many older homes are not built to withstand seismic activity. Retrofittings are expensive, and you may need them if your home is in a high-risk zone.
Areas that are prone to flood and fire also have unique insurance requirements. Sometimes, insurance companies may even refuse to provide you insurance at all.
Therefore, before making any decision, approach a real estate attorney in California, which offers you a lot of options. Talk to them, and get more information about titles, complex zoning laws, environmental laws, high-risk areas, etc.
Hidden costs that buyers don’t always see
While looking at the prices for California homes, make sure you take note of the extra costs that will arise in the future, such as Mello-Roos taxes. These are often used in new communities to cover local infrastructure expenses. Mello-Roos will come at a monthly cost, and you may not even know about them until after you make an offer.
Property taxes are also a bit tricker in California. Tax rates are capped at 1%, but the county can still reassess the value of property and raise your taxes over time.
Credit, income, and the truth behind lender requirements
Though a credit score of around 620 would be sufficient to get a mortgage to get the best rates, you need a credit score of at least 700 or higher. On top of that, your debt-to-income ratio is also important.
If you’re self-employed, securing the loan is even more challenging. When you don’t have a consistent paycheck, your bank statements become more important than your tax returns.
Bank statement loans are loans where lenders use your deposits to assess your eligibility. It might be a solution if you can’t provide traditional proof of income.
Specialized loans you should be aware of
Getting a mortgage for a home can be particularly stressful, but with some research, you can breathe easy.
California has programs like CalHFA that provide loans to first-time buyers looking to purchase a house and help cover the down payment. But even if you’ve already bought a home before, you have the options that can support your purchase.
In expensive areas like San Francisco, you’ll probably need jumbo loans.
While the areas tend to have higher than usual interest rates, jumbo loans allow buyers to purchase homes in the more expensive parts of California easily.
Professionals like teachers, veterans, and physicians, among others, can benefit from special loan programs that offer lower down payments and better rates.
Conclusion
Buying a home in California doesn’t mean just finding a place to live. You must first understand the details that will make or break the deal.
If you do the right research, you’ll know what to expect in the closing process and avoid pitfalls. Whenn in doubt, consult with a real estate attorney. They’ll help you understand the area better and what laws apply there.
