Rent VS Buy

With the Foreclosure market hitting another peek soon experts are predicting a serious increase in rent prices. Plenty of foreclosures should hit the market this year and we will see another great buyers market. There has been a lot of talk about increasing the amount a buyer would need to put down to make the sale go through. If this happens it will make qualifying more difficult.

The interest rates are still low although they are starting to climb slowly. Buying a home should always a long term investment. With rental rates going up and property value staying relatively low this year, maybe even going down a little, I think it is definitely the right time to buy. The trouble is getting the loan to fund.

I want to caution all buyers looking for a loan. Pre-Approval is a nice indicator but when it comes to funding the loan and the underwriting process there are many hurdles to overcome. You must have a good debt to income ratio, a great work history, taxes in order and paid in full, and decent credit. Also under FHA guidelines you will need 3.5% down, presently, and you need to show that in the bank for at least 2 months or where it came from. Unless you have cash. If you have cash none of this matters.

Closing costs are another major cost on top of the purchase price. They are usually about 3% of the purchase price. When writing your offer, have the agent ask the seller to credit the buyer for closing costs. They might say no but in many cases they say yes! That will really save the buyer some cash. In the last short sales I have been involved in the bank said yes to all or some of the closing costs.

So if you are planning to buy and you don't have all cash, get you financial statements in order and be persistent. You have to stay positive and jump the hurdles. If you come to a roadblock, find an alternate route. If you stick with it and succeed chances are you will walk away with a GREAT deal on San Diego real estate.