The government program that gives homebuyers that have not owned a home in the past three years an $8000 credit is set to expire on November 30th. Since the purchase of homes is critical to the recovery of our economy; much more so than giving $4500 for a pile of junk vehicle trade-in program; I would hope that Congress would pass a new measure to extend, and expand the program. The program started out as a $7500 "credit" to the homebuyer which was actually a 15 year interest free loan which had to be paid back over 15 years. The new $8000 credit is actually a 'gimme', the only stipulation is that you must stay in the home for at least three years and the money is yours to keep.
Hopefuls are pushing for a re-vamped extension to the credit that will raise the amount to $15,000 and open the credit up to all homebuyers. There are income limitations to the credit as well as minimum home prices (which don't really matter here in most of California, and definately not in San Diego). San Diego's $10,000 additional credit to buyers of new build homes has already run out of money and there are no talks to fund any more into it; likely because there is no money to be found with California's precarious financial situation.
Bottom line for those looking to buy- the time is NOW; Home prices have dropped in some areas over 40%, interest rates are at record lows- 4 7/8% a few days ago! FHA loans are pretty easy to qualify for; kind of like the old "sub-prime" loans in my view.. more on that later :-) Credit scores standards are pretty low, down payments are a low 3.5% (and can be a gift), and the FHA appraisal standards are not as stringent as they once were. Oh, and they just RAISED the debt ratios to as high as 55%, meaning your total debt including housing can be up to 55% of your income. Now, you do have to prove income- no more 'stated' loans. You do need to be aware that they are a lot of buyers out there in the starter home market, including investors with cash. Cash offers are turning out to be "King", so it will take some persistence to get a property. Make sure you have an "Iron Clad" pre-approval from a lender who has done the entire application process, income, assets, proof of funds to close etc. everything done but 'plugging in the house'. Otherwise you may find yourself losing a property for not performing fast enough and the deal will go to the next buyer in line... Yes, this has happened to one of my buyers- after 3 1/2 long months and finally having an offer accepted.
You will have a better chance of getting your offer accepted if you don't have to have an FHA loan and can qualify for a Conventional loan, you'll need at least 5% down (20% is best to avoid mortgage insurance) and higher credit scores- in the 720 and higher range. If you don't have a reputable loan officer, I can recommend a couple. If you'd like to search the MLS like a Realtor, shoot me an email DebEspo@aol.com and I will set you up on my ListingBook site so you can search all areas of San Diego.