Setting Your Price Range

As a Laguna Beach home buyer, the first question that crossed your mind is probably one of budget. Laguna Beach homes occupy a big price range-anywhere from the lower $200,000s to well over a million dollars. Where does your budget fall in this range? More importantly, how much do you have on hand-and how much of it can you afford to spend?

What's the Difference?

There's a distinct line between what you can buy and what you can afford. The home you can buy will probably match your spending power, but leave you with barely anything for all those other fees. The home you can afford, on the other hand, is well within your spending power and still allow you to pay the closing costs, get local services, and live comfortably in your new community.

Just like any other city, Laguna Beach has its own living standards. Can you afford it? This page offers a quick guide to help you find out.

Up-Front Costs

The bulk of your upfront expenses probably go to the down payment. Generally, the more you can pay at the outset, the better you'll be able to afford it in the long run. Let's say you pick a $400,000 home and pay $40,000 up front, making a 10% down payment. For the next several years, you'll be paying off $360,000-90% of your home's value-and that can become quite risky if you're on an average income. An online mortgage calculator can help you calculate your monthly expenses and better plan out your budget.

Closing Costs

Closing costs are the fees you pay alongside the home's sale price, usually to cover legal costs, agent fees and other side expenses. This can easily add up to 1% or more of your home's total value. Your Laguna Beach real estate agent can help you estimate the closing costs early on to make sure you're ready to pay up.

Home Ownership Costs

Chances are the expenses will continue well after you've moved to Laguna Beach. You may have to buy new furnishings, get the floors refinished, and sign up for local services. Many Laguna Beach homes are also part of homeowner associations, which usually charge monthly fees for maintenance. Again, you can consult your agent to get a better idea of home ownership costs in various neighborhoods.

Pre-Qualifying

The best way to know your price range is to get pre-qualified for a mortgage. This is actually considered standard procedure for most Laguna Beach homes. Before they start helping you, your agent will most likely ask you to get a pre-approval certificate or pre-qualification letter from a lender. This will tell them that you pass the lender's standards and are qualified to buy Laguna Beach real estate. More importantly, it tells you exactly how much you can comfortably pay for and still enjoy your new home.