Need an advice: Mortgage Amount and Location In Irvine

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DoorKnob

New member
Hello All,

Need an advice/opinion, I?d appreciate if you take a look at the question. I am trying to figure out the strategy on where to live and what/how to buy here in Irvine.

We will be moving into an apartment complex in Turtle Rock in June, we took a short 3 month lease on a town house. I and my wife have an 11 old kid who finished elementary school in Santa Monica, we were renting up there and we decided to move down South my work was transferred to Huntington Beach and we felt that commute/RE Prices/superior schools justified the move. While we appreciated the urban component of Santa Monica we strongly felt that the best case for us was to move.

We have selected the area South of the 405 due to the proximity to water and we felt that Irvine School District was more academics focused fi compared to Newport Mesa School District.

I?d like to see if you can let me know your opinion about the location selection and what neighborhoods or areas you?d recommend for buying a house in.

Also, since we are buying for the first time, I wanted to see what your thoughts were on the amount of mortgage we should take on. Here is our financial situation, both of us are in early 40s:
- I am the only one working and I have 170K salary, in addition I get around 90K in bonus and stock options ever year.
- I have 200K in 401K and my wife has 100K in 401k, also we saved ~150K and we keep that in bonds.
- I have a small side business making ~25K/year in profits
- I work in technology for a very stable company and I believe there is a reasonable degree of stability associated with my work. 

Since we never owned a house we are trying to get educated about the process, this thread is one of the steps in the journey.

I?d very much appreciate any input you may have and let me know if I need to expand on anything. Thanks in advance?

 
irvine south of the 405 is over $1M i believe, i think the area around UCI is a little cheaper but the turtles are probably out of your price range. even at $1M, the down payment at 20% would be 200K, you said you have 150K in bonds and 401K, do you have other liquid savings to get to a 20% down payment. typically if you dont do 20% down you get more expensive mortgages.  if i was working in huntington beach i would look at eastside costa mesa. i think you are splitting hairs between IUSD and Newport-Mesa.
 
Thanks qwerty! I'll look into Costa Mesa. We should be able to come up with up to 250K for a down payment, that'd drain all liquidity though. As we researched the area we noticed that Irvine had strong focus on academics, we did not get the same feeling about Newport-Mesa (we might be off here though) - also, we always had an impression that Newport was more upscale and having lived in Beverly Hills before we did not wanted to repeat the experience.
 
Why not look in Huntington Beach? short commute, you'll be close to the water, there are pretty good schools. and there is a range of prices from more down to earth to upscale. I hear the Seacliff area is nice and has good schools. I'm not too familiar with prices there though.  I second the sugggestion of East side costa mesa. I would not want to commute from Irvine to Huntington Beach if I could avoid it.


Also if you like the vibe in Santa Monica, you'll probably like Eastside Costa Mesa better than master planned Irvine. Its quirkier and has more character. I would live there or old Newport over Irvine, but its too far for my work.
 
nyc to oc said:
Why not look in Huntington Beach? short commute, you'll be close to the water, there are pretty good schools. and there is a range of prices from more down to earth to upscale. I hear the Seacliff area is nice and has good schools. I'm not too familiar with prices there though.  I second the sugggestion of East side costa mesa. I would not want to commute from Irvine to Huntington Beach if I could avoid it.


Also if you like the vibe in Santa Monica, you'll probably like Eastside Costa Mesa better than master planned Irvine. Its quirkier and has more character. I would live there or old Newport over Irvine, but its too far for my work.
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Agreed, at a close look at Seacliff out in Huntington Beach.  Great area with some nice homes near somewhat close to the beach.  Little to no Mello Roos too.
 
DoorKnob said:
Here is our financial situation, both of us are in early 40s:
- I am the only one working and I have 170K salary, in addition I get around 90K in bonus and stock options ever year.
- I have 200K in 401K and my wife has 100K in 401k, also we saved ~150K and we keep that in bonds.
- I have a small side business making ~25K/year in profits
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Have you watched Suzy Ormon before? She would say you are denied for the area you are seeking. Your income is decent, probably an average household income in OC, but you barely have anything saved for retirement and you're both already in your 40's? Yikes. Also, what would happen to your 12 month emergency cash fund? It may not be smart to sink all your savings/liquid into a downpayment imo. Strongly consider renting.
 
I suggest renting in south Irvine for a while - about a year minimum - build liquid during that time. In that year you will learn all about Irvine and all of its' neighborhoods. Purchasing a home in Irvine is a huge commitment based on the price point so you should probably rent first to allow yourself time to research more. And you'll also get a sense for the commute to work and see if irvine even works for your lifestyle. I give you this advice from my own experiences - this is what we did when we first moved to Irvine. Good luck!
 
DoorKnob said:
Hello All,

Need an advice/opinion, I?d appreciate if you take a look at the question. I am trying to figure out the strategy on where to live and what/how to buy here in Irvine.

We will be moving into an apartment complex in Turtle Rock in June, we took a short 3 month lease on a town house. I and my wife have an 11 old kid who finished elementary school in Santa Monica, we were renting up there and we decided to move down South my work was transferred to Huntington Beach and we felt that commute/RE Prices/superior schools justified the move. While we appreciated the urban component of Santa Monica we strongly felt that the best case for us was to move.

We have selected the area South of the 405 due to the proximity to water and we felt that Irvine School District was more academics focused fi compared to Newport Mesa School District.

I?d like to see if you can let me know your opinion about the location selection and what neighborhoods or areas you?d recommend for buying a house in.

Also, since we are buying for the first time, I wanted to see what your thoughts were on the amount of mortgage we should take on. Here is our financial situation, both of us are in early 40s:
- I am the only one working and I have 170K salary, in addition I get around 90K in bonus and stock options ever year.
- I have 200K in 401K and my wife has 100K in 401k, also we saved ~150K and we keep that in bonds.
- I have a small side business making ~25K/year in profits
- I work in technology for a very stable company and I believe there is a reasonable degree of stability associated with my work. 

Since we never owned a house we are trying to get educated about the process, this thread is one of the steps in the journey.

I?d very much appreciate any input you may have and let me know if I need to expand on anything. Thanks in advance?
Click to expand...

To really find out how much home you can afford, I think it's best that you speak with a lender and get a pre-approval letter before shopping for a home. You'll want to check with different lenders because some may also offer better rates than others (keep in mind, rates aren't secured until it's locked in when you purchase a home). The lender can give you an estimate of your monthly payment and you can determine how much of an expense you can really take on. Be careful as some lenders will give you a pre-approval letter and the amount of home they say you can buy is probably not the amount you can afford comfortably. On top of your PITI (principal, interests, taxes and insurance), you definitely want to make sure you have enough money for closing costs, reserves for a rainy day, utilities, HOA & Mello roos (if any), and any other daily expenses. I suggest you pull a free credit report (if you haven't already since you're allowed 1 free credit report a year - I like Credit Karma) and give those to lenders so they don't run your credit every time.

I agree that you should try renting in the area before considering about buying to get a good feel of the city/surrounding cities to see if you enjoy the commute from Irvine to HB. Also, I don't know if renting for 3 months is enough time to get a good feel. Unless you've done enough research to feel comfortable that this is the place you want to be and you're willing to make that commute. I personally like Irvine as I used to live there. I've actually lived in different parts of OC as I was moved around a lot. I do hope that you can find a permanent place soon because I can only imagine changing schools often for a child can be tough. Good luck with everything.  :D
 
I also agree with the others and suggest renting for longer than three months.

There are subtle things that may disinterest you about Irvine that you will not know exist until you live there for an extended period of time.

Irvine has so many different pockets and small communities as well.

I applaud your openness to share your financials with a group of unknowns, however, one may not be able to see your "worthiness" without expenses and lifestyle.  Not always how much you make but how much you spend.

A couple I know are at a similar income and they have a $550k house.  I also know people with less income than you with a house nearing a million.  I think in the Hidden Canyon thread there is someone making around what you are making wanting to get into a $2m home. I think the downpayment is from purchasing in Newport Coast at a good time, but will still probably need a solid mortgage.

Is the bonus guaranteed?  What about when the market shifts?  Are you going to be getting $40k? $50k? less? or the same $90k?

What are your expectations for house size? yard? age of house? lifestyle?

Buying a house is like buying a diamond. You have categories to choose from.  You pull back slightly on carat and you can increase clarity. Pull back a bit on color and increase cut and so on and so forth.
 
Cash down is one piece of the puzzle. From there on out, many lenders require 6 to 12 months of payment reserves ($30-$60k). Those funds can be in a retirement plan, but lenders use only about 60% of the asset given tax penalties if withdrawn. Closing costs, net after any seller or Realtor credits, will run about $2-5k. A $1m priced home with 20% down is in reality not a $200k question, but almost a $250k cash need.

From that point, and hopefully some recent resale buyers can chime in, there's about $10-$20k in real expenses that you'll lay out in the first 60 days of ownership, on top of your monthly nut. For example, a locksmith rekeying the home could run $250-$750 depending on the property. Re-screening the home will run XYZ. That old carpet either has to be cleaned or tossed, and on, and on, and on. Knowing the top end of expense before going to purchase is important, or as it's mean said before "Measure twice, cut once".

PS - Beware of Credit Karma. It's the "Zillow Zestimates" of credit score models. From their own website: https://www.creditkarma.com/question/how-accurate-is-credit-karma
 
Thank you all - great input, it's very appreciated.

All points to +12 months of renting and we are fine with that. We felt a bit pressured to purchase quickly due to almost certain interest rate hike and steady upward price creep (what do you guys think about this?), given the feedback we might better off building the cash reserve and analyzing the options.

We were also considering Huntington Beach but got somewhat turned off by public school ratings, which while solid seemed to us not to be at the same level of academic quality if compared with Irvine. I tested the commute during peak and off peak hours (Turtle Rock to Huntington), I am typically in a 25 min range (have carpool stickers) - I am very cool with this as my current commute exceeds 60 minutes one way. We'll take another look at it tough due to the Seacliff recommendations here.

On the credit side we are both over 800 FICO and aside 2x$400 car payments we have no other debt. Our current savings rate is around $6.5k/month (assuming bonus levels remain the same), we rent for about  $2.8K/month. I work for a exceptionally stable company, we managed to maintain bonus levels during last two downturns, bonuses cannot be guaranteed nonetheless, I get that part... As for the needs relating to the dwelling - I am not sure what to tell you here, we've lived in a 2 bedroom apartment (850sf) for long time, no yard, restricted space but both of us grew up in Europe in even smaller spaces and it felt OK.

Thanks again...
 
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