A love of San Diego can convert someone from frequent visitor to resident. But before taking the plunge and buying property in San Diego, you should learn some of the rules and costs of buying and owning a home in this sunny metropolitan locale.
Home seller and buyer laws
To ensure that buyers know exactly what they are getting in a San Diego home purchase, the state of California requires sellers to complete both a real estate Transfer Disclosure Statement (TDS) and Natural Hazard Disclosure (NHD). In some areas of San Diego, sellers may be required to disclose additional information about potential erosion issues, groundwater seepage and other area-specific concerns. Finally, all sellers must disclose that buyers can obtain a list of registered local sex offenders online and from law enforcement agencies.
In the event that you’re unable to make your mortgage payments, you should know San Diego primarily uses non-judicial means to foreclose on a property. This means the lender can begin foreclosure proceedings without involving the courts. While this offers a faster foreclosure process than judicial methods, it does allow delinquent homeowners 90 days after receiving a notice of default to get payments on track or work out an arrangement with the lender and prevent the home from being auctioned.
San Diego is in a community property state. That means a home purchased during a marriage or registered domestic partnership would be considered the property of both parties. Upon divorce or dissolution of the partnership, each partner owns 50% of the property and is responsible for 50% of the debt. This may also impact you during the homebuying process as some lenders, particularly for government-backed loans, will consider the debt of both spouses in a community property state, even if one spouse will not be on the mortgage or live in the residence.
Some states require an attorney to handle the closing process, but California does not. In San Diego, escrow can be handled by a company licensed to deposit and/or deliver escrow. It can also be managed by a bank, attorney, title company and certain licensed real estate agents.
To transfer ownership of property in San Diego, the seller must pay a transfer tax of $0.55 per $500. The total amount of this tax should be disclosed by the lender once you’ve selected a property.
Property tax rates in San Diego are about 0.61% of the assessed fair market value of a property, according to Tax-Rates.org. On San Diego’s median home value of $674,900, that results in an average property tax of a bit more than $4,100 per year. San Diego residents can enjoy many property tax exemptions offered by the state of California, including a $7,000 homeowners exemption for primary residences and a disabled veteran’s exemption of $100,000 for their principal residence. If the veteran has an income of $40,000 or less, the exemption may be raised to $150,000. You can find out more about property tax exemptions in San Diego here.
Conforming loan limits
In California, conforming loan limits vary by county, stretching from $484,350 to $726,525 for a single-family homes. In San Diego County, the limit for a single-family home is $690,000.
Conforming loan limits dictate the amount you can borrow to get a loan backed by government-sponsored enterprises Fannie Mae and Freddie Mac. The limit for most of the country is $484,350, but pricier areas, such as San Diego, can have higher limits. The Federal Housing Finance Agency sets conforming loan limits each year.