Located in the heart of Sacramento County, Sacramento is the capital of California and is one of the most beautiful cities in the entire state. Although the area is historically not as popular as other California cities such as Los Angeles or San Diego, Sacramento is quickly becoming desirable for many people due to its lower cost of living and high quality of life. In fact, according to CBS News, Sacramento was the number one metro area in the country people moved to in the fourth quarter of 2022. With the real estate market slowing down a bit, it is the perfect time to plant your roots in Sacramento.
If you are thinking about moving to Sacramento, then you are likely interested in purchasing a house. Once you have found the best neighborhood in Sacramento to settle down in, it’s time to start house hunting. The process of buying a house in Sacramento may seem overwhelming at first, but with the right information, you’ll be getting the keys to your new home in no time. This is what you need to know to buy a house in Sacramento.
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The Steps to Buying a House in Sacramento
What is needed to buy a house in Sacramento? There are many important steps to take before purchasing your Sacramento home. Make sure you consider these factors before you buy a house in Sacramento, CA.
How Much Does It Cost to Buy a House in Sacramento?
Purchasing a home is a serious financial commitment, so the first step is to get your budget in order. In addition to the purchase price, you’ll have to consider variables such as property taxes, homeowners insurance, maintenance, and other additional fees. You will also have to ensure that you can keep up with the everyday cost of living in Sacramento.
The Cost of Living Index in Sacramento is 120. This means that Sacramento is 20% more expensive than the national average of 120. Although this is more expensive than the national average, it is much cheaper than many other California cities, such as Anaheim, Los Angeles, and San Diego, where the Cost of Living Indexes are 153.9, 149.3, and 147.2, respectively. The lower cost of living is why many people are flocking to Sacramento from other California cities. According to Redfin, most residents moving to Sacramento are from San Francisco, Los Angeles, and Visalia, California.
Sacramento property taxes are paid annually and are an important factor to consider when buying a home in the area. A good rule of thumb for figuring out your property taxes is the assessed value multiplied by the tax rate. Luckily, property taxes in California are below the national average, and California is protected by Proposition 13, which states that general property taxes are limited to 1% of a property’s market value.
Before you buy a house in Sacramento, California, you will also have to take into consideration additional monthly fees. According to Numbeo, the average utility bill in Sacramento is $321.75. You may also have to pay an HOA fee after moving to the area. These fees are different in every neighborhood, but they average between $200 and $300 per month. HOA fees cover regular expenses such as building and property management as well as amenities in the neighborhood.
You will want to take all of these factors into consideration when deciding on your budget. To get a better idea of your ideal budget, you will need to figure out your gross income as well as your monthly debt payments. When it is time to apply for a mortgage, the lender will often require a debt-to-income ratio of 36% or lower. The debt-to-income ratio is the percentage of your income that is spent on your mortgage.
One of the best ways to get an idea of how much you can spend on a home is to use an affordability calculator. According to this calculator, if you meet the Sacramento average household income of $71,074, have a monthly debt payment of $500, and put down a down payment of $20,000, you can afford a house up to $219,854. This comes out to a payment of $1,620 per month.
Average Home Price in Sacramento
According to Redfin, the average home price in Sacramento is $475,000, which is just slightly higher than the national average of $425,177. The Sacramento real estate market is slowing down, and home prices are down 9.52% compared to last year. Homes are sitting on the market for an average of 8 days, and the median sale price per square foot is $337.
Of course, prices will go up or down depending on which Sacramento neighborhood you are moving to. Some of the most affordable Sacramento neighborhoods include Parkway (average home price of $284,000), Meadowview (average home price of $320,000), and North Highlands (average home price of $315,000). Some of the more affluent neighborhoods are Land Park (average home price of $732,00), Boulevard Park (average home price of $1.08 million), and East Sacramento (average home price of $800,000).
Find the Right Mortgage and Get Pre Approved
After your budget is determined, you will need to work on qualifying and getting pre-approved for a mortgage. When you get pre-approved, you let the seller know that you are serious about purchasing a home. This can increase your chances of getting your offer accepted. You will want to get pre-approved at least a year before putting in an offer.
Some of the most common types of loans include fixed rate, conventional, and adjustable rate.
- Fixed-rate: The amount you pay toward your mortgage never changes.
- Conventional: A mortgage loan that is not backed by the government.
- Adjustable rate: The amount you pay adjusts over time based on the market.
No matter which type of loan you choose, many variables can affect whether or not you get approved. First, you will want to make sure you put down the highest down payment you can. According to Bridgepoint Funding, most California lenders require a down payment of at least 3% of the purchase price; however, you should aim for a payment that is much higher than this. You will also want to make sure your credit score is in good shape. The better your credit score, the more likely you are to get a loan with a good interest rate.
Many lenders also follow the 28/36 rule. This rule states that your total housing costs should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%.
Sacramento First Time Homebuyer Programs
Are you a first time home buyer in Sacramento? Before you buy a home in Sacramento, you’ll want to look into the different assistance programs. Here are a few programs you can take advantage of as a first time home buyer in Sacramento, CA.
- PLHA First-Time Homebuyer Mortgage Assistance Program: This program is designed to assist low-income homebuyers in Sacramento with down payment and mortgage assistance. To qualify for this loan, you must have a household income less than or equal to 80% of the area’s median income. The minimum loan amount for this program is $10,000. Assistance is calculated at 20% of the purchase price to a maximum of $50,000. This is a 30-year loan term with a 1% simple interest rate.
- Mortgage Credit Certificate Program: This program provides a tax credit to eligible homebuyers to reduce the amount of Federal income tax the homebuyer pays. This allows homebuyers to more easily afford to purchase a home. Eligible applicants are homeowners who are first-time homebuyers who don’t exceed an income of $100,320 for a 1-2 person household or $117,040 for a three or more person household.
- CalHome First Time Homebuyer Program: This program is designed to assist low-income buyers by providing down payment and mortgage assistance. This assistance is calculated at 20% of the purchase price to a maximum of $40,000. This is a 30-year loan term with 3% simple interest. To qualify, you must be a first-time homebuyer and have an income less than or equal to 80% of the area median income.
Find a Sacramento Real Estate Agent
Before you buy a house in Sacramento, you need to find the best Sacramento real estate agent. Your agent will do most of the hard work for you and will show you homes, negotiate offers, and assist you throughout the entire process. Make sure you do your research before choosing an agent. Ask your friends and family for recommendations or search online for reputable agents.
It is recommended to work with a buyer’s agent rather than a listing agent. A buyer’s agent is legally bound to help you as the buyer, while listing agents represent the home listing and may not always have your best interest at heart.
Go Sacramento House Hunting
Next, it’s time to go house hunting in Sacramento! Before you start, make a list of the features you want, the area you want to live in, and the style of home you prefer. You will want to consider factors such as schools in the area, the walkability of the neighborhood, the year the home is built, and how close it is to your place of work.
Here are a few guides to help you decide on the best place to buy a house in Sacramento.
- Safest Neighborhoods in Sacramento
- Best Gated Communities in Sacramento
- Sacramento Suburbs
- Best School Districts in Sacramento
- Best Neighborhoods in Sacramento
- Richest Neighborhoods in Sacramento
- Best Preschools in Sacramento
Submit an Offer!
After you decide on your dream home, it is time to submit an offer! Your buyer’s agent will help you craft an offer that is intriguing to the seller. Oftentimes, the seller will come back with a counteroffer, asking for a higher price or fewer contingencies. Once your agent is finished negotiating, you will go under contract and into escrow. During this time, you will need to get an inspection and appraisal done.
Close on Your New Sacramento Home!
Once the inspection and appraisal are complete, it’s time to close on your home! During the closing process, you will transfer funds, close on your loan, get the paperwork signed, and do a final walkthrough with your agent. Once everything is signed, you will get access to your new home! The closing process generally takes about a month to a month and a half to complete.
Congratulations on buying a house in Sacramento! Now that you have your dream home, let the best movers in Sacramento get you there. The experienced team at Mother Lode Moving is here to help you have a stress-free moving experience. Give us a call today at 916-631-4285 to receive a free quote!