The Housing Crash guy says: A landlords’ rule of thumb is that a house price should be a maximum of 15 times the annual rent for that place, yet in coastal areas, houses are still selling for 30 times annual rent I think he’s got a good point there – which goes to underscore my belief that prices in Watsonville are actually very reasonable at the moment. … Looking over the ads on Craig’s List, it’s safe to say that a 3 bedroom, 2 bathroom house would rent for about $2,400 a month in Santa Cruz, assuming it was in a not-so-great location. … Let’s look at the payment for a $500,000 house – but let’s assume you’re putting down a reasonable 10% instead of the FHA minimum of 3.5% – so you’d have a $450,000 loan, again at about 5.75% because with only 10% down, you’d still need to pay mortgage insurance. … Let’s say you’re in a tax bracket of 25%, and you can figure you’d save about $640/month in federal and state taxes, bringing your effective monthly after-tax payment to about $2,519 per month, or just about $120 more than renting.
I should have just sat there and watched as my hard-earned dollars evaporated, sucked it up, been a man, and lost all that cash, the price to pay for participating in our capitalist system. … So let me assure you – if you want to buy a house in Santa Cruz, and you have decent credit (at least a 580 FICO Score to qualify for an FHA loan, I believe) and you have the debt-to-income ratios required by the guidelines. … Mind you, the median price these days in the county is $585,000 (as of August), so it’s getting to the point where you can actually buy a habitable structure in a somewhat central location for that kind of bread. … That would leave you with a whopping loan of $482,500 and payments (all-in, including principal, interest, property tax, and insurance) of about $3,500 a month (roughly, approximately – and that’s before your considerable mortgage interest tax deduction ).
There’s a little space on the California Residential Purchase Agreement form under the “financing” section to specify whether or not you’re using an FHA loan, but until recently, I had never seen that box checked. … Many parts of Santa Cruz county have been declared as declining markets by many lenders, and those lenders are requiring stiffer down payment requirements, which serve to put this less-expensive real estate out of the hands of would-be buyers. … The California Residential Purchase Agreement has a space in the FHA financing paragraph to mark enter how much the seller will have to pay for required FHA repairs – this is given as an amount “not to exceed.” … Time for the proverbial bottom line: if you don’t have a lot of cash for a down payment, and you’re buying a pretty solid home that likely meets FHA appraisal standards, and you think you can get the seller to pay your FHA mortgage insurance – an FHA loan may make sense for you.