Establish A Budget

When buying a home in California's Bay Area, your first step must be to sit down and set a realistic budget based on what you can comfortably afford. Looking for a house that is beyond your means promises nothing but disappointment and future financial woe. Conversely, just because you can afford a more expensive house doesn't necessarily mean that you should buy one.

In setting your budget, be prepared to factor in the down payment and expenses associated with the transaction, including closing costs. You will also want to consider what your monthly mortgage payments will be, as well as insurance and property taxes.

Your down payment will depend on the type of loan you have. A conventional loan typically requires a substantial down payment, usually 10-20% of the purchase price; while FHA (Federal Housing Administration) and VA (Veterans Administration) loans, which are backed by the government, require a much smaller down payment — generally 3.5% for an FHA loan and as little as no down payment for a VA loan.

Closing costs vary, depending on the circumstances and conditions surrounding the purchase agreement, but usually include title and escrow fees, appraisal and inspection fees, hazard insurance, and notary fees. Additionally, they may include loan points, mortgage insurance, reserves for impounds, and up to one month's pre-paid mortgage interest.

After establishing a budget for your East Bay home purchase, the next step in the process is to get pre-approved for a loan so you can begin searching for your East Bay home with confidence. You can proceed to this next home buying step now by visiting Step #2: Get Pre-Approved: Secure Funding So You Can Shop With Confidence.

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