First-time homebuyer programs and San Francisco's housing market

All right. In today's dollars and cents, mortgage rates climbing, reaching their highest levels in nearly three years. As of October 22nd, last week, the average 30-year fixed mortgage rate now 7.32%. The 15-year mortgage is close, 6.68%. So what does this mean for homebuyers? And is there some help out there for people hoping to buy a home? We're going to try to get you some information and help by welcoming Christina Perez with Land Home Financial Services and Mary Lou Lopez with Caldwell Banker in San Francisco, which is definitely certainly a hot market right now. So talk about, Christina, let's start with you. What are you seeing in terms of loan programs and financing opportunities for first-time home buyers? That seems to be the biggest help. Absolutely. I think the misconception continues to be that you need 20% down to purchase, and that is really not the case. We're seeing down payment assistance programs throughout the different counties, starting in San Francisco County, Contra Costa, Alameda, down to Santa Clara County. It's really important that people research, they contact their local lender, their real estate agent to ask. You do not need 20% down. You don't need perfect credit. Okay. That's the hardest thing. I'm coming down for that down payment because rents are so high. So where are you able to save? Can you tell me, because I know there's been some talk about the first time home buyer, does that apply to someone whose parents own a home? Because that's been a little bit of a discrepancy, right? If your parents are lucky enough to own a home now, you don't qualify, but are people qualifying? Absolutely. There are specific programs that require that you're a first generation buyer, but most of the programs will require that you haven't owned a home in the last three years and you will qualify. In fact, there are programs that will allow you to borrow with down payment assistance, even if you own a current home and you need to relocate due to work or, you know, family changes. So it's important that you do that research. Okay who does qualify for those zero down payment loans? Lucky enough we go there are programs available for folks down to a 580 credit score for qualified borrowers and most of the programs don't require they don't have any income limitations so it's great news for those buyers out there and you know the headlights could be misleading where they feel like rates are high prices are high I'll never be able to save it's important that they make that call and they ask those questions. And then is that down payment sort of factored into the mortgage? It is. Right. Most of the time it's financed, but also there are plenty of grant programs, not only for down payment assistance, but also for closing costs. Closing costs have increased over the last couple of years. Those programs are also available. Right. Because it's very tricky. You have to work those numbers to make sure you can afford that monthly payment. Absolutely. Right. That's the big one. Mary Lou, since you're in San Francisco in particular, How are you, how can people prepare to enter. I mean, the San Francisco market in particular, rents are outrageous and you're up against people paying all cash for these homes, right? Yeah. I mean, I think most importantly is be prepared, right? You know, work with a lender that can do a fast closing. Right now we're seeing in San Francisco, a 14-day close or sooner is very aggressive and can outbid other offers that are on that 30-day close. And additionally, work with an agent that is familiar with the market in that specific neighborhood or just work in San Francisco because you know a lot of times it's just being out there and knowing what's coming on what's coming up soon and getting ahead of the game and when you talk about being prepared I I know but for for others like it means um being pre-qualified right going ahead and getting that like your bank says you can qualify for this purchase price right this payment is that what you mean by being prepared yeah you know talk to your lender, a lender that can, again, close in 14 days, get pre-approved. It's a little bit different. You know, they have two types of words, pre-qual and pre-approval. We're looking for that pre-approval where your financials have been reviewed by an underwriter. Okay. And Christina, what other opportunities are you seeing for people who, you know, again, they're seeing that it's not just headlines, the reality of being outbid, you know, these offers coming in way above market price um the offer price um what are you seeing for some uh some optimism in the market well we are seeing a lot larger credits coming from sellers at this time for buyers it's a great time to negotiate a large credit on your purchase that credit that seller credit can allow you to do a temporary buy down um which allows you to go into sort of like a step up rate it's not an adjustable it's still a fixed rate but it allows you to come in with lower payments the first couple of years, you're utilizing those funds to make those payments. And so that's something that we've seen now come back into the market with a higher interest rate environment. Explain how that works for people. So when you negotiate a credit from the seller, depending on the amount that you're financing, it's based on your loan amount. The money that the seller credits you sits in an escrow account during the time of your loan. And those first, whether it's a year or two or three years, depending on the temporary buy down, Your rate doesn't change, but those funds allow you to subsidize your payment. So you're coming in with a lower payment every month. Okay. The big takeaway is there could be some options for you. Absolutely. Ask. Ask questions. Christina Perez with the Land Home Financial Services, Mary Lou Lopez with Coldwell Banker, San Francisco. Thank you both for being here and for the information. All right, Pam, thank you so much.