First Time Home buyers

Buying your first home can be an exciting endeavor.  Some people may have dreamed about it and saved up money for it for some time.  However, being mentally prepared for mortgage payments, property taxes and the maintenance that comes along with home ownership. Handling your expectations and taking stock of your finances are essential.

Are you ready to buy?

Owning a home is about decorating and having the freedom to have pets.  It is also about being prepared to take care of and maintain your home for years. Knowing that a portion of  your income and time will go towards maintenance and repairs.

How much can I afford?

Taking the opportunity to speak with an experienced lender is advised.  It is also recommended that although you may qualify for a significant loan amount, to buy a modest homes for now and look toward your dream home in the future.

What is  your Debt to income ratio?

The lender will look at your overall debt compared to your overall income.  Your debt to income ratio can greatly effect your fico score. Your overall debt should not be over 45%, and your housing debt should not be more than 35%.  With that said, there are exceptions when it comes to VA loans.  A Military Veteran can have a debt to income ratio as high as 55%.

Buying a home using your VA loan:

Military buyers are able to buy a home without a down payment.  That means that unlike Conventional buyers putting 20% down and FHA buyers putting 3.5% down, VA buyer are not required to put anything down as a down payment.  With that said there are nominal out of pocket cost associated with buying a home, such as an appraisal, home inspection and an earnest money deposit which is typically 1% of the asking price.  With regard to closing cost, it is possible to negotiate with the seller to pay some or all of a VA buyers closing cost.

Buying a home over the age of 55:

California offers a one time property tax adjustment for adults over 55 with CA props 60 and 90. In California propositions 60 ans 90 shield senior from tax increases in many cases.  These propositions allow seniors to continue to use their former homes appraised value in figuring the property tax on their new home.  The new home must have a value equal to or less than their former homes value when sold. There are time frames associated with the sale and purchase and for filing the claim, and once the claim is filed they will not be able to use the benefit again. Proposition 60 is for seniors moving within a county, and is for all California counties.  Proposition 90 is for senior moving between counties and each county will decide whether to grant the benefits to seniors moving into the counties.  It is advised to consult a Realtor or tax advisor for help in determining your eligibility for the tax benefit and in claiming it.

Loan options:

Conventional Loans are available in San Diego County. This type of loan are desireable for some borrowers because that can put 20% and avoid private mortgage insurance.  Conventional borrowers are also able to put down 10% or as low as 5% (but will have PMI with putting down less than 20%).

FHA Loans in San Diego are available to home buyers with putting down 3.5%. These buyers will also have Private mortgage insurance.

VA Loans are available to qualified veterans with 100% financing. There is no PMI for VA buyers.

Private Mortgage Insurance:

Also called PMI, private mortgage insurance is a type of mortgage insurance you might be required to pay for if you have a conventional loan.  PMI protects the lender if you stop making payments on your loan. If your down payment is less than 20% of the value of the home, lenders will require the borrower carry private mortgage insurance.

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