You may want to rent rather than buy at this point in time. Home prices in Orinda-Lafayette-Moraga are declining and will probably continue to decline for the next 24 months at least. Track the avg $/sq ft data for the last 18 months. There are a lot of homes bought at the peak from 2004-2007 that were financed with pick-a-pay and pay-option ARM loans in the +600K market in California that are beginning to reset, and will continue to do so, at rates that are uneconomic for the homeowners to maintain. You are seeing upticks in foreclosures in these neighborhoods as these properties come to market, further putting pressure on prices. Buying in declining market makes no sense unless you want to lose your equity.

I am not a realtor, and none of the realtors who are replying to this question will tell you the above. They get a commission if you buy, not if you rent. Go figure.

Jack,

I agree with most of what is said here. The self employment is going to be a detriment in the absence of other significant other liquid assets. If you do have a strong cash position I would suggest, before you get situated that you give Fremont Bank a try. They have a great relationship banking system and have provided several attractive home loans to my some of my self employed clients and their terms are very competitive.

From there we can work on the challenge of a 700k home in Orinda that you will be satisfied with. I too suggest that the probaility of finding suitable housing in that price point will be better in Moraga or Lafayette. As an alternative I would also suggest looking at rural Martinez, Pleasan Hill and Walnut Creek all where they border Lafayette and Orinda. Since housing is so subjective and not knowing any more than price point, it is hard to offer firm guidance..

If you are starting a business, you will not fit into the normal box for financing... It takes 2 years of being self employed to qualify.

If you do find a loan, prepare for a higher rate.

Suggest you consider taking a job in your same line of employment before starting your company. Buy the house using income from that job.

OR... suggest you rent while you wait for the perfect "cheap" house in Orinda. Just be aware that unless owner financing appears on that house, you are not going to be pleased with your financing. You will be considered a high risk as a new business owner and your rate will reflect this...

Janet Guilbault
Mortgage Banker/Broker
RPM Mortgage
925-212-6347

Hi Jack,

Not sure how important it is for you to be in Orinda, but there are six listings in Lafayette and four in Moraga (adjacent communities) that meet your criteria. I'd be happy to send you the details. Click on my picture to email your response

I agree 100% with Richard as far as financing goes and also on the limited supply in your price range. If you like, I can start sending you notifications as new homes appear on the market in the Orinda area. That way, when you are ready to purchase, you'll have a good idea of what to expect. Good luck with your new business venture!

Kamal Randhawa
Broker
510-932-1066
"Straight answers all the time"

Jack,

Re: financing...lenders like to see a minimum of 2 years of work experience in the same industry. If you are leaving a corporate job to become an independent contractor (i.e., start your own business), you typically need to be in business for at least two years as an independent contractor/sole proprietor, even if it is in the same industry. Another consideration, most self-employed professionals make more money than is reported on their tax returns due to the many tax deductions available...so even if you are actually making great income, lenders will look at your tax returns (which may show minimal income after deductions). The most common financing for self-employed individuals in your situation is "stated income" financing, however, this financing is not readily available unless you have about 30% to 40% to provide as a down payment.

Re: Orinda under $700,000...if your speaking of a single family detached home, you will find limited "attractive" inventory to choose from...most likely a home that needs updating, "contractor special" or one that is next to the 24 freeway (lots of traffic noise). That said, there is a new listing at "294 Moraga Way" with 4 bedrooms/2 baths, 2300+ sq ft that has been on the market 11 days with a list price of $699,000...propert is vacant, so if you want to see it let me know, and I can meet you there at your convenience.

Rich
925.876.1460

Hi Jack,
I have a great mortgage consultant at Chase in Lafayette that would be happy to help you through the process. Please send your email address and I'll connec the two of you.
Regards,
Suzanne Looker

Is the business you are starting in the same industry as your previous employments? What is your experience in this industry and do you have management experience?

These are a few questions the underwriters will ask. There may be more. Talk to a few loan broker (myself included if you like).