Lake Forest & Mission Viejo: Time to Buy a Bigger House.

Take a look at these two Lake Forest homes.  The first one would be considered an entry-level detached single family home.  It has 3 bedrooms, 1600 square feet, a 2-car garage and a small 3800 s.f. lot in a ‘OK’ area.  This home just sold for $485,000.  Buyers paid about $299 per square foot for the living area. 

The 2nd home is has 4 bedrooms, 2600 square feet, a 3-car garage and a 5927 s.f. lot in a very nice area.  The new owner paid $590,000 which amounts to $229 per square foot. Keep in mind that back yards and number of garages do not play into this number.

What is going on here?  How can you get almost twice the house and neighborhood for only a $100K difference?  The reason is because the first home could be purchased with 20% down or less with a conforming loan of $417K .    These loans are the easiest to get and have the lowest interest rates.  Homes that sell for $521K or less with 20% down fall into the conforming loan category.  These are our entry level homes in Orange County and are the hottest proerties.  They command top dollar and receive multiple offers in hours.

The other home  – priced at $590K – would require 30% down to take advantage of a $417K conforming loan.  There are less people who have 30% down which means there are a smaller pool of buyers for these larger homes.  Less competition = lower sales prices.  These homes are the only true deals left in the market place as home prices continue to creep up.

If you are thinking of selling your 3-bedroom condo or single family residence for a larger home, now would be the time to do so.  You will receive today’s top dollar for your place and can get a real deal on a large 4-bedroom home.  If you don’t have cash to bridge the gap between your current home’s proceeds and your new place, go ahead and get a jumbo loan.  You can enjoy your larger home for many years to come without having to go through moving into a ‘bridge home’ only to later outgrow it and pay real estate costs to sell it and move into the home you ultimately wanted.

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