Getting advice for current home and future home


#1

Hi. All.

I enjoy this forums and I need some advice.

Currently what I owned the home is located at South San Jose, Lennar Avenue one. SFH. 4B 2.5 bath. Purchased at 2015 889k(loan left 676k) and my neighbor’s home(same plan) sold around 1.2M.

Our maximum down payment is around 800k based on pre-approval. Bank said you can go 1.8~2M. This is based on keeping first home, not selling. Also bank calculate renting out as $3950.

The rent estimate $3950 by bank and my mortgage is $3201.48, HOA $241.32, and property tax $1,3542.72. So negative $47,400 vs 54,856.32.

  1. My question is that should I keep current home or sell it added more down-payment or go higher home for future family growing? The motivation is moving decent location which has decent school. I am not looking for 10/10/10. 8 above is fine for us. We don’t have kid yet.

  2. I know there is no clear answer because it really based on each individual situation, promotion, baby, moving to another company, etc? But I really want to ask keep first home buying 1.8M below is better option in terms of cash flow?

  3. If keeping first home is better choice, what is best way to make first positive cash flow, refinance with adding more down payment?

In terms of commuting, my work place is santa clara, my wife near at north san jose, so we do car pooling.

Campbell and Cambrian park I like it but always fight with my wife about home quality. My wife prefer newer home…


#2

You should ask your lender how the assumed while giving you pre-approval? Did they assume selling home or renting that home?

If you intend to rent the current home, you should ask then redo pre-approval assuming rental home.

Note, if you expect rent $3950 as rent, they account only 75% of rent as your income (no question why, lender accounts only this).

When you buy 1.8M home, calculate your property tax, it is almost 1800/month.

If you have taken 30 year fixed, do not pay extra down payment towards that home.

If you have taken ARM, you have the risk of refinance at a higher rate later time.

Do not refinance now, while considering new home, as the lender force you to stay in that home for 12 months as you may refinance now as primary home.


#3

Pre approval is based on keeping first home. I will update on my original article. Thank you.


#4

Most people here say buy and never sell. I think that applies unless you the $1.8-$2.0M doesn’t get you a new primary that you want. What’s the main motivation for upgrading? You mention more room for a larger family. 4 bedrooms is a lot for most families today which have 1-2 kids.


#5

The motivation is moving decent location which has decent school. I am not looking for 10/10/10. 8 above is fine for us. We don’t have kid yet.


#6

Property large enough for ADU action which will provide additional income or do you prefer to not go that route?


#7

You mean rent out more than two persons?


#8

You should be able to do thst within your budget. Keep the first house as a rental.


#9

Where are you looking for? My suggestion is to go near by office and buy large lot 8k+ with this kind of money. It is easier to expand at a later stage.


#10
  1. Where do you want to move? If you’re looking at Palo Alto, your answer may be different from, say, Fremont.

  2. Where are you working? Where are you likely to work in the future? (cities, you don’t have to mention employer)

  3. 1 in 4 women has fertility issues. Do you want to wait until bambino comes along to decide on buying for a school district just-in-case?


#11

If that response for me and my question about ADU action, yes. You know, inlaw or separate dwelling in yard (yes, would cost money to build) but if San Ho is as hot as everyone is saying you should be able to get a nice additional amount of rental income.

Yes, some people frown on this but frankly my SF home is almost paid for fully by inlaw action. Rent control? So what? Just keep paying me…


#12

Avenue One SFH doesn’t have yard. It has small court yard between homes.


#13

Yes, a broken record, but Fremont sounds like a perfect spot for you. You will keep your house as a rental and buy something say around 1M or slightly more or so in a good to great part of Fremont where schools are on the rise but not there yet where the housing prices reflect it. Fremont lots are fairly big, so you can buy something smaller that you can remodel and add to later as needs arise. You will have a good cash reserve to keep you sleeping tight and hopefully both Fremont and San Jose homes continue up in value.


#14

How is the school scene in Fremont now. Last I heard all decent elem. schools are overloaded and the waitlist does not look promising.


#16

Campbell and Cambrian park I like it but always fight with my wife about house quality. My wife prefer newer home….


#17

Show your wife Almaden valley. She will love the houses and you should get in 1.8M range in Leland high school. Excellent place to raise family, decent commute to North San jose and Santa Clara and large and beautiful homes. San Jose has great future considering all the recent news and Almaden may become top location considering quality of houses. Negative - commute beyond Santa Clara is painful.

On other thought, you are at-least 5-6 years away from school requirements, I will not lock my options considering schools at this stage. Rather you can plan another investment / flip when you guys are closer for school needs.
Also, I will not suggest selling house.


#18

Older homes have better bones!!!


#19

They’re also the only way to get a good sized lot. I really struggle with “SFH” that are almost townhomes. If you can talk to your neighbor through your windows, and it’s like sitting at the same table then that’s not a SFH in my book. There’s not really a difference between that and townhome (especially with current code on air gap and insulation between shared walls).


#20

As a diversification, Campbell might be a good option than buying 2 houses in San Jose which already has rent control.

You can also consider Santa Clara, Sunnyvale, Fremont, Union City. If you can afford, Mountian View, Cupertino are also good options.


#21

Who doesn’t? Tell your wife it’s always location that matters the most.