I can be a very Type A personality, especially when confronted with a new topic or situation. My tendency is to study the new situation as thoroughly as I can, looking at it from every possible angle, reading as much as I can about the background and details of the thing. A lot of people say they do this, but I can take it to absurd extremes. I spent several weeks learning about the Japanese language before I first started learning the language itself; whenever I upgrade my computer, I will happily take a few months devouring all the information I can find about the latest technology improvements, all so I can eventually decide whether a $50 upgrade is worth my money. And don't even get me started on the endless investigations I carry out into the smallest California ballot initiatives.
So, with that in mind, you may be able to appreciate the mixture of excitement and unease with which I'm approaching the possibility of buying a home. It's vaguely been on my radar ever since graduating from college as something that I'd want to do some day. It become a far more distant possibility when I moved to the San Francisco Bay Area in 2005. And now, with the twin encouragements of a rising income and falling prices, I've recently started allowing myself to dream again.
Which is great, and also means that my eyeballs will be buried in housing books, mortgage rates, open houses, community blogs, negotiating tips, and the like for a long time to come.
I first started what I consider the "semi-serious" phase about six months ago, after starting a new job. Because this would obviously be a first purchase for me, I only had a vague understanding of what would be involved, and found a few books to be very helpful in orienting me about what could be expected. Thanks to these books, I was able to get a rough idea about how long my search might take, the order in which to prepare things, stuff to look for in a home, the kinds of professionals I would be working with, and other basic stuff.
While this was helpful, reading such books was also a frustrating experience. One thing I knew even before this research was that all real estate is local. Not only because each market is doing its own thing, moving up or down in reaction to local employment and demographic trends, but also because each state and metro region has its own customs when it comes to real estate itself. So, a book could talk broadly about what happens at closing, but it can't say whether the buyer or the seller will be responsible for most of the costs, because the answer will vary depending on where you are.
Fortunately, there is a great book out there that does a lot to remove the ambiguities and make the process that much more real: "How to Buy a House in California" by Nolo. Yeah, it won't be of much use to residents of 49 states, but personally, I love it.
By focusing on the California market, the authors can actually provide some specific guidance on how things are generally done. This is true even when there is a difference between various parts of the state; for example, I learned that in northern California, title companies usually handle escrow, while in southern California, specialized escrow companies do so. It was also surprisingly pleasant to read realistic-sounding descriptions of housing options that matched what I would expect, such as a $950,000 2-bedroom house in the Berkeley Hills or a $350,000 condo in Sacramento. By contrast, many books with a national focus casually talk about $200,000 3-bedroom houses, which causes me to choke.
This book, like similar ones I've read before, is very thorough, and covers pretty much every area you'd need to be concerned about. It starts with the most important task of defining your ideal home, which includes introspection and discernment to separate your needs from your nice-to-haves. I'm sure that home-shopping will be an overwhelming experience, and it's critical to lay that anchor early on to avoid being swept away. It has several good chapters on financing, starting on determining how much house you can afford, and moving on to also cover strategies for saving for a down payment and shopping for a mortgage. I was actually kind of surprised (pleasantly so) at how in-depth this part went, explaining the distinction between various types of loans, how to find them (mortgage brokers versus do-it-yourself), historical trends, calculating whether to buy points, buy-downs, and more arcana.
Another huge advantage of this book is that the latest edition was published quite recently, and as such the text reflects the current down market in California. It's written to be as timeless as possible, and so it includes strategies that you should use in hot markets in addition to the strategies we buyers should be using now. It also includes discussions of items like 0-down mortgages and interest-only loans, while warning that they are virtually impossible to get now.
Nolo is best known as a publisher of do-it-yourself legal forms. I used them to create a will a little while ago, and was pleased at how easy they made it. In keeping with that tradition, this book is also filled with plenty of forms, from sample offers to contingencies to the letter you should write your contractor if they aren't doing the work they promised. And again, everything is written with California legal statutes and customs in mind. I plan to keep these around so I can compare them with what I actually see.
So, that's some of the stuff that's awesome about the book. What's bad?
I have no right to complain about this, since the book is titled "How to Buy a HOUSE in California," but I'm likely to buy a condo, and the book is less interested in condos and townhomes than it is in traditional houses. It doesn't ignore them altogether, but it does kind of shunt most discussion into Chapter 7, a weird beast that addresses buying new construction in a tract, as well as buying new OR existing condos and townhomes. The advice it does give sounds really good, but there isn't nearly as much of it as there are in other topics within the book. Throughout the rest of the book, they'll often refer back to Chapter 7 since buying these types of properties can be so different from more traditional home-buying.
And while I have absolutely no right to complain - the book is great and more current than anything else in print - the fact remains that these are turbulent times, and even in the months since publication there have been significant changes in how real estate works in this country and in California. Freddie and Fannie were being nationalized as the book was going to press, and they included a sidebar that basically says, "Hey, this is happening, it will affect things but we don't know how just yet." Now we know: as a condo buyer, I'll likely need to come up with a hefty 25% down payment to get the best mortgage rate, and will have trouble getting a mortgage at all in developments that are under-sold or over-rented. On the plus side, there is a Nolo site online for the book that can potentially communicate at least some of the errata. Still, the point is that this book can probably get you 80% of the way towards understanding the current market, but you'll still need to follow the news and dig into the local scene to learn the remaining 20%.
I was lucky to find a copy of this book at the San Jose library - I loves me a free book! They got something like 8 copies, and right now they're all checked out. I think this book puts me on very solid footing as I continue what may be a year-long plan to buy (or not, depending on how things go). I was delighted to see that Nolo has a downloadable version of the book for a very reasonable price. As useful as this seems, it is a good candidate to be the first e-book I ever buy.
Good luck!
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