Carmel Valley First Time Buyers | What to Know When Buying a House

Common Misconception about the Down Payment

The more money you can allocate for the down payment, the lower your mortgage payment will be. A stronger down payment also means more equity in your home, but one of the common misconceptions about buying a house is that you need 20% down. In fact, there are loan products that offer as low as 3.5% down like the FHA loan. Starter homes in Carmel Valley can cost $750,000 or more, so sometimes buyers will put less than 20% down, then refinance after a few years to reach their 20% down payment and eliminate their Private Mortgage Insurance(PMI).

Associated Costs | What to Know When Buying a House

When considering your budget for a home purchase, there are other costs to consider besides the down payment. We give our clients a settlement statement once they get into escrow showing a breakdown of the costs they will incur. The title company prepares this statement, so if you are getting a loan, your lender will have a separate statement showing their fee as well. When you get into escrow and wire your initial deposit (standard is 3%, but this is negotiable), the money into an escrow account managed by the title company handling the listing. The title company is responsible for transferring ownership of the home, and they require a fee as well. The escrow fee is negotiable between the buyer and seller, but it is common for the buyer and seller to split the fee 50-50.

Consider your annual 1.1% property taxes paid biannually, and include homeowners insurance as well. As the buyer, you are not responsible for paying your Realtor, the seller pays the commission, so you don’t need to include a Realtor fee in your budget. You should include a cushion for any maintenance and repairs your house or property might need.

Proximity to the Carmel River

Over the last couple of years, we have seen the Carmel River run very low, and incredibly high to the point where the river merged through Carmel River State Beach and into the ocean. Ben keeps us current on the Carmel River with regular video updates like the one below from late summer 2017. 

Properties in the valley are either on the northern side of Carmel Valley Road away from the Carmel River, on the southern side near the river. Both locations offer beautiful properties, but some of the properties on the southern side are quite close to the water where flood insurance can be a very large expense for the homeowners.

Some of the homes in these areas were built elevated to avoid any flooding, and consequently, their flood insurance fees are significantly lower than homes close to the ground. Living near the Carmel River can provide a serene, private landscape. We just want our Carmel Valley clients to be prepared when thinking about what to know when buying a house. Looking for a full guide to buying in Carmel Valley? Click here.