What comes to mind when you think of the ultimate place to live? The answer for many people is Southern California (SoCal), and it’s not hard to see why. Imagine living where the sun always shines, the temperatures are pleasant all year round and the white sand beaches stretch for miles. Whether you prefer city life or the great outdoors, there are plenty of activities waiting for you. The job market is thriving, the neighborhoods are diverse, and the real estate looks like it’s straight out of a magazine.
It’s safe to say that SoCal is a dream destination. However, planting your roots in this area is not cheap. The median home price is $800,000 and the cost of living is higher than most parts of the country. Anyone interested in making Southern California their new home will need to make sure their ducks are lined up, especially their finances. Keep reading for tips.
Since you probably don’t have $800,000 to buy a SoCal home, you’ll need to apply for a mortgage. Lenders will assess your credit history and score during the application process to determine your eligibility. The idea is to assess whether you are financially responsible enough to handle a loan. Your credit reports provide mortgage companies with a lot of information, including the types and amounts of credit/loans you’ve received, payment history, debt-to-income ratio, credit utilization rates, and more. .
If the data they review is positive and you meet all other criteria, you will receive a loan offer. However, you will be rejected if you have a low credit score, tons of debt, missed payments, collection accounts, or high usage rates. More than loan approval, your credit is used to determine the down payment amount, loan term and interest rate. Therefore, you want to make sure you present a favorable credit profile to mortgage lenders.
If you think your credit won’t be enough (or if you’ve ever been turned down for a mortgage), you should consider ways to improve your financial history. These solutions could include paying debts, timely payment, and negotiating with creditors to resolve collection accounts. You can also use credit restoration solutions such as credit builder cards to establish or improve your credit.
No matter where you move, you will need to support yourself and your family. These expenses include housing (mortgage, insurance, property taxes and maintenance), utilities, food, transportation, health care and clothing. Create a list of each necessary expense. Next, decide which SoCal city you want to call home.
Next, find the average cost of each expense in that city. Add up the costs and the number revealed will give you an idea of how much you need to survive. Remember, this does not include leisure activities, other financial obligations, or unforeseen emergencies. You will need to account for these expenses to get a clearer picture of your monthly expenses.
Do you have enough money to maintain a decent quality of life? Sure, you might have money set aside in a bank account, but do you have a substantial source of income to keep your expenses going? If you plan to keep your current job or own a business, compare your salary to the average cost of living in SoCal. If you plan to find a job after your move, analyze the average salary of positions that match your experience.
Ideally, you want to spend 50% of your income on needs, 30% on wants, and 20% on saving and paying off debt. If you don’t have enough money, you’ll need to consider strategies to reduce your debt, eliminate unnecessary expenses, or increase your monthly income.
Many people dream of owning a home in popular SoCal destinations like Coronado, San Diego, Costa Mesa and Venice. While each of these cities has unique attributes that make them an ideal place to live, luxury living comes at a price. Before you start browsing real estate in the SoCal area, make sure you’ve researched and applied the financial principles above so you can truly enjoy your new home.