Buying the perfect home requires knowledge and preparation. CNNMoney.com has a surprisingly insightful list of top things you need to know when buying a house, but there are a couple adjustments that need to be made for Northern California.
CNNMoney.com's #3. Debt vs. Income
Housing affordability in the Bay Area is definitely challenging. The CNNMoney.com article notes a rule of thumb to buy a house that is priced at about 2.5 times your income, but because the numbers are so different in this area, the more important ratio is actually your debt-to-income ratio. Can you afford to payback your mortgage?
CNNMoney.com's #5. School Districts
Good school districts in Silicon Valley are often priced into the house already. When families look at homes to buy, they often look at the quality of the school district as a key criteria. An improving school district may increase demand for houses in a neighborhood, but a district that has had a reputation for great schools for a while probably won't see an additional price increase for the same reason. But in a declining market, though, there may be more price stability.
Also, be aware that there may be special assessments in areas with good school districts that may increase your tax liability every year (actually, twice every year). If you don't have any kids or you send yours to private schools, you won't immediately benefit from the money your paying.
CNNMoney.com's #6. Buyers' Agents
They recommend getting professional assistance but also acknowledge the copious information on the Internet. In order to represent your best interests, real estate agents can't be gatekeepers to information --- they need to be interpreters and guides into areas where the client doesn't have experience or expertise. Since the seller pays most of the agent fees, there is little benefit in forgoing the guidance of a well-qualified buyers' agent.
CNNMoney.com's #8. Pre-Approval
On the financing front, it's important to note that once you get pre-approved, you may not be able to shop around for better rates from other companies. The challenge is that in order to get pre-approval, the mortgage broker or bank you use pulls a credit report. Having too many credit reports pulled may negatively impact your credit score and increase the rate you pay.