first time home buyer in CA.I was hoping that pros on this site can answer some of my questions.

Asked by Philip Shen, 90292 Sun Sep 27, 2009

HI,my name is philip and Im a first time home buyer in CA.I was hoping that pros on this site can answer some of my questions. So here is the story, I have some savings and can be used as down payment or maybe able to pay for majority of the house in some cases . I am on a visa. I have ssn but have never used it. Probably no credit since I have never dealt with credit related issue. Whats the possibility of me getting a loan? I would also like to find out what are all the related governmental charges(tax and etc) when buying/selling a house. Would the annual tax rate of 1~1.5% of the propertys value be correct ? What else am I expected to pay during ownership? Since therer chances of me moving to another city for some reason in 2011. I 'd also like to know if it would be practical to rent it out? Does the rent count as income or will be taxed differently? Im interested in foreclosure or REOs . Your input is much appriciated.

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Keith Sorem, Agent, Glendale, CA
Mon Sep 28, 2009
I work in the LA area and would be happy to talk with you if you'd like to call and ask more questions.

The bottom line is that lending guidelines are more strict that in prior years. My suggestion would be to speak with a competent lender and have them analyze your situation. There is no obligation, no forms to complete, simply an oral question and answer of your background, income, etc.

Depending upon the amount of down payment the FICO requirements will vary, but usually a minimum average score of 620 is going to be needed to qualify for a mortgage.

So far as the costs of home ownership, in the US the costs of home ownership are by and large a tax deduction. My recommendation for first time buyers is that they discuss their finance and tax situation with a CPA and develop of budget.

If you obtain financing based on owner occupancy, then opt to move out and want to rent the property, it is possible that your lender will require you to refinance. I suggest discussing these questions one on one with a finance or tax professional in order to answer all of your questions and make sure that your expectations are met.
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Grace Hanamo…, Agent, Cupertino, CA
Mon Sep 28, 2009
Hello Phillip:

As Cindi already noted, you should certainly be able to qualify for a loan provided you have sufficient down payment. I would also suggest that you not limit your housing choices to REOs/foreclosures or distressed propertiesas there are plenty of wonderful homes available and being offered by private home sellers. REOs may once have been very aggressively priced here in California, but banks have learned their lesson, and REO homes no longer are the "price bargains" they may have been in the past.

As a buyer, you should count on the following costs:

Charges when buying a home:
1. Transfer taxes for the County (check with your Realtor to find the percentage--often, in an REO situation, you as the buyer will be required to pay for this fee, which is normally paid by the seller)
2. Transter taxes for the City
3. Supplemental property taxes
4. Property Taxes prorated
5. Notary charges
6. Title insurance for the mortgage company
7. Homeowners insurance premium
8. Points and fees for the loan processing

Costs Associated with Home Ownership:
1. Property Taxes
2. Maintenance
3. Utility Expenses
4. Mortgage Insurance (if using an FHA loan)
5. Property insurance
6. Homeowners Association assessments if the home is located in an HOA
7. Sewer charges (often not included in the water bill)

How Rental Income is Calculated: If you decide, at a later date, to rent the home, all of the rental paid by the tenants is considered "rental income" and is offset (or reduced) by any expenses related to the maintenance, upkeep and interest on the loan to the home. The principal portion of the loan payments is NOT considered an expense against rental income, however, the interest charge is an expense, as are the other expenses incurred to own the home. Rental units are also allowed depreciation, which is not an actual dollar expense, but a permitted reduction in the monthly income due to the reduction of the property value through age. Net rental income (gross rents less attributable expenses and depreciation) is considered "ordinary income" and subject to taxes in the same manner as your employee income. To learn more about how this supplemental income is calculated, please consult with your CPA or financial planner.

Good luck!!

Grace Morioka, SRES, e-Pro
Area Pro Realty
Co-Host: Naked Real Estate on
0 votes
The Hagley G…, Agent, Pleasanton, CA
Mon Sep 28, 2009
Hi! Lot's of good questions. You should be able to get a loan with a large down payment....if you buy a single family home expect to pay home insurance, property tax (count on varies by area) utilities. Some single family homes may have a homeowners association.
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Philip Shen, Home Buyer, 90292
Sun Sep 27, 2009
some details I should add. Interested in area on the west side of LA. From pacific palisade all the way down to playa del rey.
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