Top 4 Factors to Consider When Choosing Your Mortgage in San Diego's Housing Market

With home prices and interest rates in San Diego remaining relatively high, securing a mortgage can feel intimidating, even for seasoned borrowers. However, don’t let high costs deter you. Many local homeowners have successfully navigated the mortgage market, often finding loans that suit their financial situation. Recent surveys indicate that most U.S. homeowners are satisfied with their mortgage choices, with a noteworthy 69% stating they would buy their current home again if given the chance.1 Finding the right mortgage that complements your lifestyle is crucial, especially in a diverse and dynamic market like San Diego. As you compare loan options, consider how various factors will impact your overall comfort and financial planning. Here are four essential factors to keep in mind when navigating the San Diego housing market: 1. Your Credit Score Your credit score plays a significant role in determining the interest rate and type of mortgage you can secure. In San Diego, where the median home price is notably higher than the national average, a good credit score is particularly crucial.  To qualify for a conventional mortgage with a major lender in the area, a FICO score of at least 620 is typically required. For jumbo loans—common in San Diego given the high property values—you may need a score as high as 700.2 If your credit score is low, don’t despair. FHA loans are available for borrowers with scores as low as 580 (or even lower with a larger down payment), while VA loans may also be an option for military members with scores in the 580 range.3  2. Your Income and Expenses Understanding your income and expenses is essential in San Diego’s competitive housing market, where cost of living is high. Lenders generally expect you to spend no more than 28% of your income on housing, and a maximum DTI (debt-to-income) ratio of 36%.4 Given the region's rising property taxes and insurance rates, evaluating your budget is key.  San Diego's homeowners often have unique expenses such as HOA fees for condos or community pools in suburban neighborhoods. It's advisable to keep your DTI ratio below 36% for better mortgage approval odds. If your ratios are high, you may need to consider non-conforming loan options or work on reducing your debts.  3. Your Expected Down Payment In San Diego, the average home price can be daunting, making the down payment a significant factor in your mortgage decision. While putting down 20% is no longer a strict requirement for conventional loans, it may open doors to better mortgage options. The median down payment in 2023 was around 14% nationally, with younger buyers typically putting down about 8%. In San Diego, where home values are high, aiming for a larger down payment can help you secure a mortgage with more favorable terms. FHA loans require only a 3.5% down payment, and VA loans may allow zero down payment for eligible borrowers.5 Keep in mind that lower down payments can lead to higher monthly payments, including PMI (private mortgage insurance), which can add significant costs.  4. Your Lifestyle and Risk Tolerance Lastly, consider your lifestyle and risk tolerance. A mortgage typically lasts many years, so it’s essential to choose one that aligns well with your financial goals and future plans. Fixed-rate mortgages are popular among San Diegans because they offer stability in monthly payments, allowing for easy budgeting amid fluctuating rental prices and potential cost increases. If you're considering an adjustable-rate mortgage (ARM), be prepared for potential increases in payments after an initial fixed period. Given the competitive nature of the San Diego market, such a strategy might work if you plan on selling or refinancing within a few years, but careful planning is essential to avoid financial strain. Bottom Line Choosing the right mortgage in San Diego requires careful consideration and a clear understanding of your financial situation. Given the area’s unique housing market dynamics, it's essential to shop around and compare loan terms to find the best fit for your needs.  We are here to help you navigate your options and connect you with vetted mortgage professionals who can provide guidance tailored to your situation. Reach out when you're ready to get started! --- The information provided is for informational purposes only and not intended as financial, legal, or tax advice. Consultation with appropriate professionals is recommended for specific advice.  Sources:1. Bankrate - [Homeownership Satisfaction](https://www.bankrate.com/mortgages/home-affordability-report/)2. Bankrate - [Credit Score Requirements](https://www.bankrate.com/real-estate/what-credit-score-do-you-need-to-buy-a-house/)3. U.S. News & World Report - [VA Loan Information](https://money.usnews.com/loans/mortgages/va-loans)4. Bloomberg - [Budgeting for a Home Mortgage](https://www.bloomberg.com/news/articles/2024-05-17/how-much-income-do-you-spend-budget-for-home-mortgage-in-us)5. Bankrate - [No Down Payment Options](https://www.bankrate.com/mortgages/no-down-payment-mortgage/)

Mid-Year Market Update for 2024: What San Diego Buyers and Sellers Need to Know

Mid-Year Market Update for 2024: What San Diego Buyers and Sellers Need to Know Last December, when the Federal Reserve projected a series of benchmark rate cuts in the coming year, some analysts speculated that mortgage rates—which had recently peaked near 8%—would fall closer to 6% by mid-2024. Unfortunately, persistent inflation has delayed the central bank’s timeline and kept the average 30-year mortgage rate hovering around 7% so far this year.   While elevated mortgage rates have continued to dampen the pace of home sales and affordability, there have been some positive developments for frustrated homebuyers. Nationwide, the inventory shortage is starting to ease, and an uptick in starter homes coming on the market has helped to slow the median home price growth rate, presenting some relief to cash-strapped buyers.   There are also signs that sellers are adjusting to the higher rate environment, as a growing number list their properties for sale. Still, economists say a persistent housing deficit—combined with tighter lending standards and historically high levels of home equity—will help keep the market stable.   What does that mean for you in San Diego? Read on for our take on this year's most important real estate news and get a sneak peek into what analysts predict is around the corner for 2024.   MORTGAGE RATE CUTS WILL TAKE LONGER THAN EXPECTED At its most recent meeting on May 1, the Federal Reserve announced that it would keep its overnight rate at a 23-year high in response to the latest, still-elevated inflation numbers.   While mortgage rates aren’t directly tied to the federal funds rate, they do tend to move in tandem. So, while expected, the Fed’s announcement was further proof that a meaningful decline in mortgage rates—and a subsequent real estate market rebound—is farther off than many experts predicted.   “The housing market has always been interest rate sensitive. When rates go up, we tend to see less activity,” explained Realtor.com chief economist Danielle Hale in a recent article. “The housing market is even more rate sensitive now because many people are locked into low mortgage rates and because first-time buyers are really stretched by high prices and borrowing costs.”   Many experts now speculate that the first benchmark rate cut will come no sooner than September, so homebuyers hoping for a cheaper mortgage will have to remain patient.   “We’re not likely to see mortgage rates decline significantly until after the Fed makes its first cut; and the longer it takes for that to happen, the less likely it is that we’ll see rates much below 6.5% by the end of the year,” predicted Rick Sharga, CEO at CJ Patrick Company, in a May interview.   What does it mean for you in San Diego? Mortgage rates aren’t expected to fall significantly any time soon, but that doesn’t necessarily mean you should wait to buy a home. A drop in rates could lead to a spike in home prices if pent-up demand sends a flood of homebuyers back into the market. Reach out to schedule a free consultation so we can help you chart the best course for your home purchase or sale.   BUYERS ARE GAINING OPTIONS AS SELLERS RETURN TO THE MARKET There is a silver lining for buyers who have struggled to find the right property: More San Diegans are sticking a for-sale sign in their yard. Given the record-low inventory levels of the past few years, this presents an opportunity for buyers to find a place they love—and potentially score a better deal.   In 2023, inventory remained scarce as homeowners who felt beholden to their existing mortgage rates delayed their plans to sell. However, a recent survey by Realtor.com shows that a growing number of those owners are ready to jump in off the sidelines.   While the majority of potential sellers still report feeling “locked in” by their current mortgage, the share has declined slightly (79% now versus 82% in 2023). Additionally, nearly one-third of those “locked-in” owners say they need to sell soon for personal reasons, and the vast majority (86%) report that they’ve already been thinking about selling for more than a year.   Renewed optimism may also be playing a part. “Both our ‘good time to buy’ and ‘good time to sell’ measures continued their slow upward drift this month,” noted Fannie Mae Chief Economist Doug Duncan in an April statement.   However, the current stock of available homes still falls short of pre-pandemic levels, according to economists at Realtor.com. “For the first four months of this year, the inventory of homes actively for sale was at its highest level since 2020. However, while inventory this April is much improved compared with the previous three years, it is still down 35.9% compared with typical 2017 to 2019 levels.”   What does it mean for you in San Diego? If you’ve had trouble finding a home in the past, you may want to take another look. An increase in inventory, coupled with relatively low buyer competition, could make this an ideal time to make a move. Reach out if you’re ready to search for your next home.   If you’re hoping to sell this year, you may also want to act now. If inventory levels grow, it will become more challenging for your home to stand out. We can craft a plan to maximize your profits, starting with a professional assessment of your home’s current market value. Contact us to schedule a free consultation.   HOME PRICES ARE RISING AT A MORE MANAGEABLE PACE Homebuyers struggling with high borrowing costs have something else to celebrate. The national median home price has remained relatively stable over the past year, due to sellers bringing a greater share of smaller, more affordable homes to the market.   In addition to offering cheaper homes, a recent survey found that home sellers are also adjusting their expectations when it comes to pricing. In many regions, just 12% anticipate a bidding war (down from 23% last year) and only 15% expect to sell above list price (versus 31% in 2023).   But buyers shouldn’t expect a fire sale. According to Realtor.com’s April Housing Market Trends Report, “On an adjusted per-square-foot basis, the median list price grew by 3.8%, as homes continue to retain their value despite increased inventory compared with last year.”   Dr. Selma Hepp, chief economist for the data firm CoreLogic, projects that home prices will keep rising at a gradual pace through the rest of 2024. “Spring home price gains are already off to a strong start despite continued mortgage rate volatility. That said, more inventory finally coming to market will likely translate to more options for buyers and fewer bidding wars, which typically keeps outsized price growth in check.”   What does it mean for you in San Diego? An increase in more affordable housing stock is great news, especially for first-time buyers. And with home values expected to keep rising, an investment in real estate could help you build wealth over time. Reach out to discuss your goals and budget, and we can help you decide if you’re ready to take your first step on the property ladder.   DESIRE TO OWN PERSISTS, BUT AFFORDABILITY REMAINS AN OBSTACLE Surveys show that the American dream of homeownership is alive and well, despite the financial challenges. In fact, a recent poll by Realtor.com found that 55% of Millennial and 40% of Gen Z respondents believe that now is a good time to buy a home.   According to Fannie Mae Chief Economist Doug Duncan, buyers are starting to adapt to the new economic reality. “With the historically low rates of the pandemic era now firmly behind us, some households appear to be moving past the hurdle of last year’s sharp jump in rates, an adjustment that we think could help further thaw the housing market. We noted in our latest monthly forecast that we expect to see a gradual increase in home listings and sales transactions in the coming year."   The Realtor.com study also revealed that even a small drop in mortgage rates could give a big boost to homebuyer demand and affordability. In fact, 40% of the buyers polled would find a home purchase attainable if rates fall under 6%, and an additional 32% plan to enter the market if rates dip below 5%.   But waiting for rates to drop isn’t the only approach that Americans are using to afford a home. A survey by U.S. News & World Report found that determined homebuyers are employing a variety of strategies, including shopping multiple lenders (52%), purchasing discount points to lower their rates (36%), and opting for adjustable-rate mortgages (36%). More than three-quarters of today’s buyers also hope to refinance to a lower rate in the future.   Despite the obstacles, these respondents remain steadfast in their desire to own a home, listing financial benefits, stability, and more space as their top motivations for wanting to buy.   What does it mean for you in San Diego? If you’re dreaming of a new home, let’s talk. We can help you evaluate your options and connect you with a mortgage professional to discuss strategies you can use to make your monthly payments more affordable. And remember, in many cases, you can refinance if rates drop in the future.   If you have plans to sell, it will be crucial to enlist the help of a skilled agent who knows how to maximize your profit margins and draw in qualified buyers. Reach out for a copy of our multi-step Property Marketing Plan.   WE'RE HERE TO GUIDE YOU While national housing reports can give you a “big picture” outlook, much of real estate is local. And as local market experts, we know what's most likely to impact sales and drive home values in your particular neighborhood. As a trusted partner in your real estate journey, we can guide you through the market's twists and turns.   If you’re considering buying or selling a home in 2024, contact us now to schedule a free consultation. Let’s work together and craft an action plan to meet your real estate goals.

6 Strategies to Save on Home Insurance Premiums in San Diego

6 Strategies to Save on Home Insurance Premiums in San Diego From wildfires to floods, San Diego has experienced its share of climate and weather-related challenges in recent years. With these events come an increased need for comprehensive home insurance coverage. However, as construction costs rise and insurers adjust their rates, finding affordable coverage can be a challenge. Here are six strategies specifically tailored to help San Diego homeowners save on home insurance premiums while ensuring adequate protection for their properties: Shop Around Start by exploring multiple insurance quotes from different providers specific to San Diego. Consider reaching out to insurers directly or working with a local independent insurance broker familiar with the area's unique risks. Compare not only the premiums but also the coverage details, ensuring you understand the policy's terms and limitations. Look for reviews and ratings from other San Diego homeowners to gauge customer satisfaction and reliability. Increase Your Deductible Consider opting for a higher deductible on your home insurance policy. By choosing a deductible you're comfortable with and can afford, you may lower your monthly premiums. Evaluate your savings and risk tolerance to determine the optimal deductible amount for your situation. Remember, higher deductibles typically result in lower premiums but require you to pay more out of pocket in the event of a claim. Bundle Multiple Types of Insurance Take advantage of potential discounts by bundling your home insurance with other policies such as auto, RV, or boat insurance. Many insurers offer significant savings for bundling multiple types of coverage. This approach not only streamlines your insurance needs but can also result in lower overall premiums. However, ensure that bundled coverage meets your specific requirements and provides adequate protection for your San Diego property. Ask About Available Discounts Explore various discounts offered by insurers in San Diego. From nonsmoker discounts to savings for military-affiliated families or certain professions, inquire about all available incentives to lower your premiums. Additionally, consider options like paperless billing or paying premiums annually for potential cost savings. By understanding and leveraging available discounts, you can maximize your insurance savings. Avoid Making Small Claims Exercise caution when filing insurance claims for minor damages to your San Diego home. Since filing multiple claims can lead to higher premiums or even policy nonrenewal, evaluate the long-term financial implications before submitting a claim. For minor repairs that fall within or slightly exceed your deductible, consider covering the costs out of pocket to avoid potential premium hikes. Be Strategic About Home Improvements in San Diego When planning home improvements in San Diego, consider how renovations may impact your insurance premiums. Upgrades that enhance safety and mitigate risks, such as upgrading electrical or plumbing systems, may qualify for premium reductions. Conversely, additions like swimming pools or extensive renovations may increase premiums due to higher property values or added hazards. Consult with your insurer before undertaking significant home improvements to ensure adequate coverage and minimize potential premium increases. Bottom Line: Protecting Your San Diego Property While navigating home insurance premiums in San Diego can be challenging, these strategies can help you find affordable coverage without compromising protection. Remember to assess your specific needs, risks, and budget when selecting a policy. For personalized advice and assistance, consider consulting with a knowledgeable insurance professional familiar with the San Diego market. We're here to help you safeguard your investment and enjoy peace of mind in your San Diego home.