San Diego Mortgage Options

San Diego is a unique real estate market because property values range all over the place. To finance your property, you need to understand the San Diego mortgage options available.

San Diego Mortgage Options

For the most part, real estate markets in the United States have a similar profile. A vast majority of the properties will fall within a couple hundred thousand dollars of each other, a figure represented by the average home price for the area. San Diego, however, is entirely different. Depending on the month, the average home will be priced between $500,000 and $600,000. This average, however, is misleading. A vast majority of the homes in the market will be priced from $700,000 up or $400,000 and down. This odd variation results in two distinct mortgage markets

Most homes under the $400,000 price level fall into a particular categorization in the mortgage industry. This category is known as conforming loans. Conforming loans are simply those that a lender can obtain a guarantee of repayment for from a third party. The third party is always a government or pseudo-government party like Fannie Mae, FHA, HUD and so on. With the guaranteed repayment security, lenders will offer you better initial and long-range terms on the loan.

Your San Diego mortgage options for homes valued from $700,000 on up are entirely different. The loans are categorized as non-conforming mortgages. Non-conforming simply means the amount of money being borrowed is in excess of what the FHA, Fannie Mae and so on will guarantee repayment. Without this security, the lender will shift more of the risk of the loan to you. In practical terms, this means you will have to pay slightly higher fees, interest rates and points, if any, on the loan. One way to combat this is to put down more money on the home. This effectively lowers the loan to value ratio, and makes the lender more comfortable with issuing the loan.

When it comes to San Diego mortgage options, conforming and non-conforming loans are not your only options. The mortgage industry has matured significantly in the last 15 years with the new found maturity being expressed in new loan programs. These programs include, but are not limited to, no document loans, zero interest loans, hybrid mortgages, balloon mortgages, bad credit mortgages and hard money loans to mention only a few. Simply put, there is a lender for practically every borrower these days.

When considering your San Diego mortgage options, the best approach is to identify the situation you are in and find multiple lenders that write loans for that scenario. Then it is just a matter of shopping for the best terms for your loan.

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