Buying a home in California is something that millions of people dream of. That perfect combination of weather, scenery, and excitement creates what California living really is about. San Diego is one of the most preferred places to live, so finding down-payment help and home buying assistance is critical to affordability for many new buyers. As such, many people decide to buy a home here each year. But for first time home buyers, it can sometimes be difficult to do.
Things like securing a loan, coming up with a down payment, and getting a good price on a home are all tricky steps for first time home buyers in Southern California. However, there are numerous opportunities that can help make it easier to get into your home. If you are considering buying a house in San Diego County, now is great time for several reasons. Beyond the fact that rates remain near record lows, Fannie Mae and Freddie Mac have announced new programs that only require between a 3 and 5% down-payment. Many cities have been aggressive with home buying grants in Oceanside, Escondido, Carlsbad, San Marcos, Chula Vista and more. (See San Diego Home Buying Grants and Oceanside Home Buying Assistance)
First, find a good realtor. This will be your guide to the right opportunities and could help you tremendously by steering you towards homes in your price range that are good values. Without a realtor, you'll be navigating the world of buying a home totally blind. It's also important to take a look at all of your options offered through government programs. First time home buying in San Diego is something that could be helped through a wide range of different programs, particularly things like the Down payment and Closing Cost Program offered by the County of San Diego.
Under this program, you can secure a low interest loan of as much as 33% of the purchase price of a home or $70,000, whichever of the two is less. These funds can help make a substantial down payment and cover the closing costs of a home for those with low incomes and who meet certain requirements. Considering that many loans require between 3 and 10 percent of the purchase price as a down payment, this is very important.
There are some basic guidelines to keep in mind where this program is concerned, however. These include:
San Diego has some of the most beautiful homes in the country, and it makes a lot of sense to decide that you want to live here. However, the first step for those buying their first home should be to find out just what kind of assistance they can qualify for. This could help you far more than you might think, and make it even easier to get into the home of your dreams. Keep that in mind and your new home could be much closer than you realize.
The economy is looking stronger on the national level. Home prices are rising. Interest rates may be going up? Is it too late to buy a house in San Diego or elsewhere in the current economic cycle?
We don't think so. While it is becoming more of a seller's market – definitely in San Diego – there still is time to buy a home before the market gets too hot. Here are 6 reasons it is not too late to buy in San Diego and in other hot real estate areas:
Rates are still in the low 4s for a 30 year fixed mortgage. This is an historically low rate.
It should be noted however that rates have started to climb in the last six months. The Federal Reserve raised rates in December 2016. Also, the Fed stated that it would probably increase rates two times in 2017.
The mortgage markets have priced those future increases into the rates; we now are seeing rates in the area of 4.25%, which is about .5 a point higher than a year ago.
Economists think that mortgage rates are going to climb to around 4.5% in 2017. While that will add something to your monthly mortgage payment from a year ago, this is still a very low mortgage rate.
For first time buyers in San Diego, now is a very good time to go ahead and take the plunge and buy a home. It is likely that we will see rates higher in a year's time. And with housing prices much more expensive in California than other parts of the country, this really could be your last good chance to get a low mortgage for some time.
With Donald Trump in the White House, the markets are betting that we will see significant regulatory reform in the real estate and mortgage businesses. It is too early to say for certain, but we think there is a possibility of regulations on mortgages being loosened so that more lenders will dip their toes into the lending market.
It always is beneficial if there are more lenders in the mortgage market as it will drive down costs and prices.
If the Dodd Frank law is significantly reformed in 2017, it is likely that there will be more low cost mortgages on the market. We don't know if we will see the return of 100% financing mortgages again, but we expect lower cost products to be available.
Fannie and Freddie has announced that it will increase the limit on the mortgages that it will buy from lenders for 2017. The new limit is $424,100 from $417,000. In high cost areas, the conforming loan limit is now $636,000.
For buyers in San Diego, this is very good news. When a lender knows that it can sell the loan to Fannie or Freddie, more lenders will lend money. This creates lower priced mortgages; that's very important in expensive San Diego.
With more low cost mortgages available, more people in the San Diego area can become a homeowner.
Just as with Fannie and Freddie backed loans, the FHA has increased its conforming loan limit to $424,100 in most of the US, and up to $625,500 for areas such as San Diego.
This is another great development for San Diego buyers. FHA loans are available with only 3.5% down and flexible lending criteria. So if you are buying a $500,000 house in San Diego, you only need to have about $16,000 down to buy your home. This will make buying a home in this expensive area less of a headache, especially for a first time home buyer in San Diego who has no equity.
After the crash, big banks including JP Morgan and Bank of America pulled out of mortgage lending. However, things could soon change.
If the Trump administration decides to take the shackles off of big banks and cuts regulations, more big banks could get back into the mortgage business.
If the big banks come back to the mortgage lending business, this could also lead to lower borrowing costs for consumers in San Diego. Big banks left the market because they were forced to cough up billions in fines and legal settlements after the mortgage meltdown.
Providing more available credit to borrowers in expensive markets would be an excellent development for San Diego buyers.
San Diego is one of the more expensive areas to buy a home in 2017. But with the potential changes in the regulatory environment and the still low interest rates, we think that 2017 is still a good time to buy a first time home in this fine city.
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