Here in San Diego (and everywhere else) those Fed actions have helped keep interest rates low and stimulated buying (and re-financing) while the real estate market bottomed out over the last 3 years. For a beleaguered San Diego real estate market, that was one of the few bright spots – the low interest rates for qualified borrowers.  Even if you weren’t a home buyer, if you were one of the lucky (or smart) ones, you may have refinanced your loan during this time and you may have gotten a 30 year fixed mortgage at or near 4 ¼ % — again, for qualified borrowers.

Well, those days are most likely gone for some time.  Interest rates began inching up toward the end of March and are still creeping up at this time.  It’s still a great time to be a buyer in San Diego.  Home prices appear to have bounced off of their bottom and right now it looks like conditions are favorable for a little spring selling bump.  And in spite of the upward creep, mortgage rates are still low.

These conditions look to prevail for the near future.  The concern of course is rising interest rates due to inflation but all signs point to a slow economic recovery especially in the all important category of employment.  Without healthy employment there can be no inflationary pressure for goods and services and interest rates are likely to remain low.  These conditions can’t last forever though.  As employment picks up during the recovery it is likely that interest rates will increase as well.  What does it all mean?…that right now is a good time to be a buyer in San Diego.

We feel this is a stimulus package that needs to stay in place. We still see everyday how the San Diego housing industry is suffering. The San Diego housing industry is one of the leading driving forces behind a recovering economy. The industry needs all the help it can get to clear all of the foreclosures and short sales from the market.

As people buy homes in San Diego, whether new or old, they immediately begin the spending process getting them fixed up. They buy new windows, window coverings, decorative items and furniture. They hire contractors to remodel kitchens and baths. They get new roofs installed. Bottom line, every time a San Diego home sale takes place the economy gets a boost within many industries. San Diego needs this continued economic boost to get us back on the road to a full recovery.

If you believe like we do and want to see this home buyer tax credits remain in place please contact your Congressman to let them know. If our San Diego area Congressman hears from enough of us they will listen. Don’t procrastinate, the sooner we get a ground swell going the better chance we have at getting an extension of the current programs or the implementation of some new programs.

We are here to help you still take advantage of the current programs before they expire. The programs are written so that all you have to do is have a home under contract before April 30, 2010. We then have until July 1, 2010 to actually consummate the sale. It’s not too late, give Floyd or Larry a call toll free at 877-269-1814. We have the tools and the knowledge of the San Diego real estate market and current financing programs to still make it happen for you and we welcome the opportunity.

It’s happening everywhere. You can’t pick up a newspaper without reading about the absurd number of homeowners who are “underwater” and are choosing to simply “walk away” from what is probably the most important asset they have – their home.

“Underwater” means that the homeowner owes the bank more than the home is worth. If the owner has to sell due to circumstances in their life (divorce, job transfer, job loss etc.) that they can’t control, they find themselves in a quandary. What do you do? Many, in my opinion, are making bad choices – they’re walking away from the home and letting the bank foreclose. In most cases this is the worst decision they can make.

Let’s look at some other options:

One of those options is a “loan modification.” A loan modification is a change to one or more terms of a borrower’s existing mortgage(s). The idea is to keep the homeowner in his home by making the monthly payments more affordable. Loan modifications do happen – people have been helped. But in a volatile market that’s shifting on a daily basis, the level of willingness to make these changes on the part of lenders is inconsistent at best. The current administration’s efforts to help the housing industry by getting borrowers into loan modifications have been only moderately successful.

Another option is the “short sale.” By now, most homeowners who are in trouble have heard of the term “short sale”. A “short sale” means that a house is being sold for less than the seller owes on it. In other words, the sales price doesn’t cover the mortgage. The difference between the sales price and the amount owed is how much the property is “short.” The lender takes the loss on the loan when the house is sold. The homeowner sells the house and walks off into the sunset. It’s a little more complicated than that, but first, let’s ask the obvious question:

Why would a lender consider a short sale where they receive less than they are owed?

The obvious reason is that they will lose more if they foreclose. A foreclosure can cost a lender an extra $40,000-$60,000 in attorney fees, trustee fees, holding costs and maintenance outlays on every foreclosed property. And a foreclosed property won’t fetch any more $$ on the open market than a property that has been sold short. In fact a foreclosed home that is vacant will usually sell for less on the open market. So let’s not kid ourselves – banks are motivated to sell homes short.

And yet many homeowners opt to walk away and let the bank foreclose. Why?

Misinformation mostly. A lot of it comes from the bank that they’re dealing with. Many owners just don’t understand that there are options other than foreclosure…even if the bank tells you they are going to foreclose, you have other options. If you get behind on your mortgage and you contact your bank, there is no one at the bank who will take the time to evaluate your situation and give you a list of options. For this reason alone, many owners feel the only path to take is the one leading to default.

That situation is changing as the San Diego real estate market must move toward solving its problems of default and mounting debt. Banks are looking at other paths, other outcomes. Financially strapped owners are learning this and now the “short sale” has become the “transaction du jour” in domestic real estate. That’s a good thing because in almost every instance a short sale is a better outcome than foreclosure to a troubled homeowner and to the bank.

Short Sale Benefits

There are several immediate benefits for a homeowner involved in a San Diego short sale. First, it relieves the stress of collection activities, public notices, and the forced sale of the property. Second, a short sale enables the homeowner to get a fresh start. It’s significantly less damaging than foreclosure to the homeowner’s credit record and there are strategies that allow the homeowner to avoid reporting discharged debt to the IRS.

If you or someone you know are in an “upside down” situation on your home, consider a properly negotiated short sale. At East County Home Living Realty, our short sales are negotiated through an attorney who represents only the seller – all the way through to the sale of the property.

Summary

Bottom line, a San Diego short sale allows the homeowner to get out of a financial hardship and start over much sooner than a foreclosure

If negotiated properly the loan can be reported as "settled" or "paid as agreed." We’ll discuss the sometimes tricky negotiation of the short sale in a future blog.

If you would like to learn more about the benefits of short sales, contact one of our knowledgeable Agents at Rancho San Diego Homes & Loans by calling toll free at (877) 269-1714 or use our Contact form.