With sky-high rents, tenants should take another look at purchase opportunities.
Possibly the most affordable opportunities on the South Coast are in the La Goleta condominium complex, consisting of 270 one- and two-bedroom units. These are located near Hollister and Highway 217 into UCSB. At the moment, there are five one-bedroom units for sale ranging in price from $299,000 to $349,000.
What does buying one of these units look like?
Well, the conventional lenders are now making 95 percent loans with only about a ½ percent interest rate premium for the additional risk. Best of all, for a student, non-occupant family members can co-sign and, if they have enough income, qualify completely for the payment, even while the student isn’t working — and with 5 percent down.
Another scenario would be two people purchasing together with combined gross incomes of $60,000 a year. They should be able to qualify for a $285,000 mortgage with good credit and no other payments.
To make things easier, they may even qualify for a conditioned grant equal to 3 percent of the loan amount, or $8,550. This would make the down payment $6,450 on a $300,000 purchase price. After additional closing costs of about $2,850, the lender will want the buyers to still have two months of reserves in the bank, or about $4,500.
So the total cash required to make the purchase would be around $14,000. Gifts may also be acceptable by the lender to help with the cash requirements.
The total monthly payment under this scenario would include the loan at $1,444, the taxes at $313, condo insurance at $35, homeowners association dues at $330 and mortgage insurance at $128, for a total of approximately $2,250. With tax savings of approximately $225 (consult your accountant), the after-tax payment would be close to $2,025 per month.
Maybe owning isn’t such a distant dream?
— Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at ed@sanroquerealty.com or 805.687.1551. The opinions expressed are his own.