Preparing for Home Ownership in SD

There’s never been a better time to purchase a home given historically low 30-year fixed interest rates combined with low home values. The county as a whole experienced a decrease in the number of sold properties and median sales price since December. The median price for condos and townhomes decreased from $218,250 in December to $200,000 in January, while median single family home prices decreased from $375,000 in December to $368,750 in January. 

For first-time homebuyers, preparing for home ownership before jumping into this market is crucial to ensuring a smooth journey. A professional REALTOR® can be a tremendous asset, and one of the topics he or she can give guidance about is how to organize your finances in preparation for buying a home.

According to REALTOR® Magazine Online, there are eight steps to help achieve a strategic financial plan:

- Create a family budget by using receipts for what you actually spent over the last six months.

- Reduce your consumer debt to between 8 and 10 percent of your total income. Lenders look for a total debt load of no more than 36 percent of income. This number includes your mortgage, which typically ranges between 25 and 28 percent of income. 

- Get a handle on your expenses. This can be done by writing down everything you spend for one month and from your list, identify ways to save.

- Consider increasing your income by taking on a second, part-time job.

- Save for a down payment and set a goal of saving at least 20 percent of a home’s sales price.

- Create a house fund. Deposit money into the account on a monthly basis.

- Stability of your earnings stream is important; therefore it is important to keep your job for at least two years. While you don’t need to stay in the same job forever to qualify for a loan, having a job for less than two years may mean you have to pay a higher interest rate.

- Establish a good credit history by paying your bills on time and try to pay off the entire balance monthly.

There are many factors to consider when choosing where you will purchase your first home, including price. San Diego County has some great deals for homebuyers. Although the first month of 2011 didn’t prove to be groundbreaking in terms of improvement in San Diego’s real estate market, we expect to see an increase in inventory over the coming months as the number of short sales and foreclosures continues to increase.

Most San Diego zip codes contributed to this overall decline and are allowing homebuyers the opportunity to purchase homes in areas they might not have considered a year ago. San Diego communities like Cardiff-by-the-Sea, Rancho Bernardo and even Rancho Santa Fe continue to experience a shift in the single family home market, making them more affordable than they’ve been in years. And, cities such as Chula Vista, Poway and Mira Mesa are still very affordable for first-time homebuyers. 

As you consider purchasing a home, take the time to evaluate your finances and real estate strategy, and be sure to consult a knowledgeable REALTOR® for advice and guidance.

By Bob Kevane, 2011 San Diego Association of REALTORS® President - sdar.com

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