First time home buyer San Diego. Should I rent or buy?What type of loan should i get?

Question by sapphire_17_2001: First time home buyer San Diego. Should I rent or buy?What type of loan should i get?
I have been pre approved for 280k.I make about 3200 after taxes.I don’t have money to put down.I have 5500 in credit card debt and 558 car payment(that I’m going to refinance).I have a credit score of 628 nothing negative on my credit report.I’m in the military and will be in SD for awhile. I don’t want to rent and let my money go to waste but with the market so high i’m not sure if i should buy.Everyone out here is just out for your money and not your best interest financially.If anyone could give me some good advice i would really appreciate it.

Thanks!

Best answer:

Answer by rhsaunders
On the numbers, I don’t see how you could afford to buy a place in that area, although if you are stationed at Miramar, someplace like Poway might work for you and be far enough from downtown to be at least somewhat affordable. Check a local realtor’s web site to see what is available; that’s how I bought my present house. You need to pay off that credit card debt, and that should be your first priority: not only will that improve your credit score, it will get some expensive debt off the books.

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4 Comments → “First time home buyer San Diego. Should I rent or buy?What type of loan should i get?”


  1. Realty Shark

    Apr 14, 2012

    I am sending you to the State of California web page that gives you information on the affordable housing programs and first time buyer programs. Where before they were a bit on the useless side, they have changed considerably and even though there is a lot of reading here, if you read it thoroughly, you won’t regret it. There are down payment assistance and reduced interest rate programs out there waiting for you. This site will be your homework; you will not be misquided or hoodwinked. The resources through the California Association of Realtors official web site, http://www.car.org plus the Department of Real Estate http://www.ca.gov are going to be valuable to you. Knowledge is a wonderful thing for a first time buyer. Find a realtor with an impeccable reputation and let her navigate through this with you. Here is your homework – read it before someone gets their hands on you – best wishes to you.

    http://www.car.org/library/media/papers/pdf/Steps2000.pdf


  2. Cheeky Realtor

    Apr 14, 2012

    You should try to get a VA loan, since you’re in the military. If you don’t have a lender and would like for me to refer you to an agent who will represent you at no charge to you, please visit my website and send me an e-mail. There are some people in the real estate and mortgage industry who are not solely in it for the money, as being that way would likely only benefit someone at that time and would prevent him/her from building lasting business relationships based on referrals. It is really counterproductive in the long run to what we do.


  3. novak-9

    Apr 14, 2012

    House can be a good investment, but I don’t think you can do that at this point. In SD, $ 280,000 doesn’t buy much. May be studio condo, if you are very lucky.
    say borrow 280.000 30 year fixed at 6.20 %
    Monthly payment $ 1714.91
    Home/ Mortgage Insurance 100.00 ?
    Property Tax 150.00 ?
    Credit card interest at 12% 30.34
    Car payment 558.00
    Condo fee 500.00 ?
    That ‘s $ 3053.25 per month. This is not include your car insurance, your credit card principle, Utility cost, foods, gas, clothing , etc……..
    Even you refinancing your car, this won’t make much different. Interest only mortgage is very dangerous in today’s market. Difficult to get a roommate on studio. Unless if you can get the housing allowance from military, I don’t think it’s a good idea at this point.
    Keep your good credit score, and save some money for future down payment. I am sure you will buying the house in few years.


  4. W. E

    Apr 14, 2012

    Hi, since you are in the Military why not go with a VA loan, The rates are great and you have NO MI insurance. You will have no problem getting 100 percent financing, and if you go conforming you will have MI insurance, that is why I suggested going with a VA loan. There are other programs out there, like a pick a payment option (where you pick the monthly payment, like interest only, 15 yr, 30 yr and 1 percent payment). But be careful if you cloose to always pay the 1 percent, since that will get you into a neg amorization. It is good if money is tight once in a while.

    VA Loan Information: Visit the home page of the VA. http://www.va.gov/

    http://www.vamortgagecenter.com/

    The VA has increased their loan limits! The maximum loan amount in most cases is $ 417,000. The VA also offers some advantages over conventional loans:
    Other benefits of a VA Loan:
    1. No Down Payment required at closing
    2. Lower closing costs than conventional loans
    3. No prepayment penalty if you pay off your VA loan early
    4. No monthly Private Mortgage Insurance payment
    5. The lender is willing to negotiate your interest rate

    GOING TO THIS SITE, IS A MUST: http://www.homeloans.va.gov/veteran.htm

    IT HAS THE FOLLOWING HELPFUL INFORMATION FOR YOU, ALL ABOUT THE VA LOAN – Home Loan Guaranty Services

    ON THE HOME LOAN: THERE ARE Pamphlets on the VA Home Loan Program
    http://www.homeloans.va.gov/pamphlet.htm

    Go to these websites

    http://www.nehemiahcorp.org/

    http://www.fanniemaefoundation.org/

    http://www.fha-home-loans.com/

    ALSO –
    When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now – (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 – This is just a estimate – ok –

    It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help – especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

    Talk with a broker, a broker underwrites for many company’s (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a “hard” pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

    Try to find someone (broker) that will pull your credit one time, and submit your loan application to company’s that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only – not the final – but it does help you figure things out.

    Cost associated with your loan. You will need to pay for the appraisal up front (when it being done). You will need to pay for The Home Owners Insurance Coverage for at least 6 months (ask your lender), if you are escrowing (where it is added into your mortgage payment, than lenders normally want to see 1 year paid).

    The seller can help you with up to 6 percent of closing cost. So the title fee, lender fees, underwriting fees, flood cert, etc can be paid for my the seller. Check your good faith estimate that I mentioned above.

    Research on the Internet. Look at the MultipleListing Service to find houses you like in neighborhoods you’re eyeing. This will also give you an idea of how much sellers are asking for listed homes.

    Start interviewing agents so you’ll have a good one when the time comes to start looking. Get referrals and select someone who knows your market and the neighborhoods you prefer. A good agent will notify you as soon as a home that fits your criteria goes on the market and stays on top of the listings on a daily basis and calls you the minute a good match shows up, especially in communities where homes are listed and pending sale in the same week, or even same day.

    Pin down the basics, specifically the neighborhoods you like that will accommodate your family’s needs, including commute to work, schools, recreation, shopping, and, most importantly, are in a price range you can afford.

    Have an open mind. It’s easy to start looking at houses and get discouraged because you don’t see anything that matches your vision of the perfect house. But be open to a home’s potential. Remember carpet and flooring can be replaced, walls can be painted, and a dreadful kitchen can be updated. Think about whether the floor plan will work for your family.

    Find a qualified inspector. You’ll want to find a qualified professional affiliated with the American Society of Home Inspectors or American Association of Home Inspectors to examine your Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing. The inspector will provide a report and if there are any major problems, they can be negotiated with the seller. Or you can back out of the deal altogether

    Make a list of features that are important in your home

    Write down desirable locations you would consider, an acceptable price range, number of bedrooms and bathrooms, and any other amenities. Be specific. It is unlikely that you will find a home that offers every feature you desire; however, without a wish list, it will be more difficult to recognize a home that meets your expectations.

    Provide the information to your Realtor
    Your Realtor will look for homes that match your criteria. This will save you time – you won’t need to look at homes that don’t fit your needs and desires. Choosing the wrong home can become a costly mistake – a home which is too large or too small for future needs; a fixer-upper when you are not handy; house that is too far from work or too close to traffic; home in the wrong price range.

    A proper game plan will save you time and reduce the hassle of shopping for a home. Spend a little time in advance and save a lot of time and money in the future.

    Thinking, “I can’t afford a home”

    Many people feel they can’t afford a home, but affording a home has never been easier. Mortgage rates are more flexible today than ever, and the tax laws favor home ownership like no other tax shelter.

    Home ownership is a durable (real) investment. Although no one can say if a specific home will appreciate in value, generally speaking, the odds favor the homeowner.

    Numerous unique tax advantages are available to homeowners. The thousands of dollars you pay in mortgage interest is deductible. This tax deduction alone can sometimes make owning your own home cheaper than renting with “after tax” take home dollars.

    Failing to properly “screen” your Realtor

    It’s likely that you don’t often interview people. Yet, in order to find the Realtor who is right for you, you may need to interview several. The quality of your home buying experience is dependent upon your skill at selecting the best qualified person.

    It’s interesting that in the real estate business someone with many successfully closed transactions usually costs the same as someone who is inexperienced. Bringing that experience to bear on your transaction could mean a lower price at the negotiating table, buying in less time, and experiencing a minimal number of hassles. Your agent should be a skilled, win-win negotiator!

    You need to select an agent who guarantees his/her service. You should have the right to fire the agent if you are not satisfied – no questions asked.
    Agents make it their business to provide every service connected with your home search, from expert advice in the early stages through careful monitoring of your settlement. The more closely you work with your agent, the better your needs are known and the more effectively you can be served.

    Your agent should have access to the MLS system – a computerized system that will assist you in locating the home that fits your needs and desires.

    The purchase of your home could well be the most important financial transaction you have ever made. The person you select can make it a satisfying and profitable activity or a terrible experience. It’s your home. It’s your money. Never hesitate to ask questions.

    Failing to obtain a home inspection from a qualified inspector

    The job of a professional home inspector is to look over every major part of a home and write a report that judges the home’s quality and condition.

    A home inspector reports on the structural and mechanical condition of the home. After the inspection, you will have the facts you need to make a decision about buying your home.

    A well-qualified inspector who has adhered to federal licensing standards can spot problems that you might not be able to see. Expect problems to be clearly explained, repair expenses closely calculated, maintenance costs estimated, and a written report delivered within a day or two.

    Most contracts are written conditional on the outcome of several inspections. These inspections may include several items including inspection for wood-boring insects, excessive amount of radon gas, structural soundness, and the condition of the heating, wiring, and plumbing.

    When the contract is written, it should specify who would be responsible if there is a problem with the results of any of these inspections.

    If well written, home inspections can create a safety valve for both the buyer and seller. If poorly written, the result can be heartbreak or law suits.

    Your Realtor should be very familiar with the laws regarding home inspections. Many people have lost the home of their choice because the agent failed to comprehend this crucial report.
    Not knowing your rights and obligations

    Real estate law is extensive and complex; the contract for sale and purchase is a legally binding document. An improperly written contract can cause the sale to fall through or cost you thousands of dollars for repairs, inspections, and remedies for title defects.

    You must be certain which repairs and closing costs are your responsibility. You must know whether the property can legally be sold “as is” and how deed restrictions and local zoning will affect the transaction. If there are defects in the title, or if the property is in conflict with local restrictions, you or your Realtor must remedy them. Otherwise, you could lose thousands!

    It is your Realtor’s job to know the laws governing real estate transactions. They are involved in an on-going training program to keep up-to-date with these laws.

    You deserve to have an agent who is not only knowledgeable about the transaction, but is also willing to educate you throughout the process so you will feel more comfortable.

    Failing to make your own inspection

    You probably would not want to rely on the seller to point out defects in a house he is attempting to sell. There may even be hidden problems of which he is unaware.

    Be sure your sales contract is worded so that any “earnest money deposit” must be returned in the event the house fails inspection. If a major defect is found, you have the option to cancel the contract and have your deposit returned, bargain for a lower price to compensate for the cost of repairing the problem, or have the owner make needed repairs before the sale.

    Even before you get to the point of a contract and having a professional inspector look at the house, there are many items you can check yourself as you are shopping for a home.

    Structure – Basement, check the foundation for cracks or water marks. Floors, are they level? Does the roof sag?

    Water damage – Look for unevenly painted ceiling or wall; mildew odor in basement; signs of re-plastering or re-tiling in just one area of the room.

    Water pressure – Flush toilet and turn on both hot and cold water faucets at the same time to test.

    Plumbing – Ask what type pipes are installed and their age. If applicable, ask when the septic system was last inspected and cleaned. Stand near the tank to detect odor or soggy ground.

    Wiring – A 100-amp system is typical in modern construction and uses a one-inch main line; this can be seen leading to the fuse box. Appliances such as dryer or range require a 220-amp line. Notice if lights flicker or don’t work. Check for electrical outlets . . . usually at least 2 in each room.
    Energy efficiency – Ask to check last year’s heating and cooling bills. Determine if proper insulation has been used.

    Pests – Be alert for small accumulation of sawdust in the basement. This might indicate an insect problem. Obtain date and results of the last wood-destroying pest inspection.

    GOOD LUCK TO YOU

    ALSO, Make sure the Mortgage Broker you work with can do a VA loan, and not pull your credit until you know for sure (ok).


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