Known as “the birthplace of California,” San Diego was the first place on the West Coast ever visited by Europeans. In the nearly 500 years since, the housing situation has become a bit more cramped, as “America’s Finest City” is the second-largest city in California and the eighth-largest in the United States.
San Diego’s current real estate situation is reflective of its desirability, with a median listing price of $689,000 that is nearly 86 percent higher than the national median listing price of $275,000, according to Zillow.
In terms of housing price growth, however, San Diego is presently a bit weaker than the national trend, with home values rising a modest 3.5 percent over 2018, and projected to increase another 3.4 percent within the next year. For this reason, Zillow has rated San Diego’s market temperature as neither hot nor cold, but merely “neutral.”
Though San Diego’s real estate scene doesn’t currently qualify as a buyer’s or seller’s market, prices remain high enough that homebuyers will likely need the best mortgage available. These aspiring homebuyers should remember that their mortgage and refinancing rates will also be influenced by many other national and local economic factors, including state and city laws, foreclosure rates, and competition among lenders.
House hunters should also keep in mind that a borrower’s personal finances will have a significant influence on what type of loan products or mortgage and refinancing rates they are eligible for. Read on to learn more about these factors and how they help determine the best mortgage rates in San Diego.
Current Mortgage Rates in San Diego
Mortgage Factors Rate in San Diego
A variety of factors go into determining mortgage and refinancing rates for current and potential San Diego homeowners. Learning more about how lending practices are affected can help a borrower save more money during the home financing process.
Credit score
Most lenders will look at your individual credit score first when assessing what rates you may qualify for, or if you are even qualified for a home mortgage loan. Though different mortgage providers have different requirements, and not all of them rely on credit scores to determine credit worthiness, the majority of lenders prefer a score of at least 620 for a conventional loan.
A higher credit score will typically earn an applicant lower mortgage rates, while a lower credit score can mean a borrower faces higher rates or even loan ineligibility, although it is still possible to receive a mortgage with bad credit.
Down payment
Another way to significantly reduce your mortgage rate, as well as your principal and monthly payment, is to make a large down payment. Financial experts have traditionally recommended that borrowers put down 20 percent or more, though making such sizeable down payment has become far less common in recent years.
In fact, many modern lenders offer low or no money down loans, though borrowers tempted by such deals should be aware that paying less upfront can end up costing more money over the life of the loan.
Loan term
The loan term is the amount of time a borrower has to pay off their loan, which also has a profound impact on a borrower’s mortgage rates. In general, shorter loan terms will carry lower interest rates but higher monthly payments, while longer loan terms tend to feature lower monthly payments at higher rates.
If you are financially able to pay off a loan relatively quickly, you can save a significant sum of money by choosing a shorter loan term.
Type of refinance
Current homeowners sometimes refinance their home loans in order to take advantage of lower interest rates. There are many refinancing options available, including the rate-and-term refinance, which allows borrowers to lower their rate or change their loan type. Other popular options include the cash-out refinance, the cash-in refinance, and the short refinance.
Get the Best Mortgage Rates in San Diego
Due to the city’s sky-high housing prices, homebuyers should put a lot of effort into finding San Diego’s best mortgage rates and refinancing options. Comparing quotes from multiple mortgage providers, as opposed to applying to just one or two lenders, can potentially save borrowers tens of thousands of dollars over the life of a loan. Follow these simple, yet essential steps to guarantee that you score the best rate possible:
Compare different mortgage and refinance options
A large variety of different mortgage products exist, and it’s likely that you could be eligible for more than one. The type you choose will go a long way toward determining your rates and monthly payments. For example, adjustable-rate mortgages often save borrowers more money than fixed-rate mortgages, but only if the borrower is capable of paying off the loan relatively quickly.
Additionally, due to the city’s high housing prices, it’s likely that a homebuyer in San Diego will need to obtain a jumbo rather than a conventional loan. And there are also specific loan products aimed at first-time homebuyers, along with certain government-backed mortgages uniquely available to armed forces service members, veterans, and qualifying military spouses.
Obtain Multiple Quotes from Lenders
Research by Freddie Mac has shown that when applying for a mortgage, the average borrower could save as much as $1,500 by getting just one extra rate quote, and $3,000 or more by soliciting five quotes. These numbers demonstrate the importance of shopping around when applying for loans, as simply going with the first and only lender you apply to can prove to be a costly mistake.
Remember to Factor in Additional Costs and Fees
It’s important to remember that there are also quite a few additional fees that go into determining the total cost of a loan. Borrowers should be sure to factor in all of the additional costs, including potential broker fees, underwriting costs, prepayment penalties, and closing costs. They should also be provided with a Good Faith Estimate within a few days of submitting an application.
Recommended Lenders in San Diego
San Diego has many mortgage companies for borrowers to choose from, and the best way to save is to compare quotes from as many as possible. These are a few recommended lenders in the city to help get you started:
- Quicken Loans: America’s largest lender and No. 1 choice for the top national mortgage provider, Quicken Loans distinguishes itself from the competition with a 90 Day Rateshield
benefit that lets applicants lock in their rate completely free for 90 days while they consider their other options. - Rocket Mortgage: An online lender powered by Quicken Loans, the exclusively online Rocket Mortgage offers the same 90 Day Rateshield benefit as its parent company, but adds the speed and convenience of a mobile application process.
- Navy Federal: This credit union offers a wide range of mortgage products and low minimum loan amounts, making it ideal for the tens of thousands of military members stationed at the massive Naval Base in San Diego.
- CrossCountry Mortgage: Another top pick, CrossCountry Mortgage enables borrowers to buy a home with as little as one percent down through their HomeInOne Program.
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