San Jose Mortgage Rates

Living in San Jose

Known as the capital of Silicon Valley, San Jose, Calif., overflows with cultural diversity, historical attractions, outdoor recreation and, of course, technological innovation, which is highlighted at The Tech Interactive. More than 1 million people call the city home.

The current housing market in San Jose is strong. In fact, San Jose and its neighboring communities scored a 75.08 out of 100 on the “Hotness Index,” according to the National Association of Realtors. The area has seen some slowing when compared to last year’s numbers, but growth remains better than the U.S. overall.

Right now, San Jose is doing well for sellers, with single-family residences averaging just 24 days on the market. Furthermore, the median home sales price in San Jose for the second quarter of 2019 was $1,150,000, an increase over $1,075,000 from the first quarter.

The rules and costs of buying a home in San Jose

When purchasing a home in San Jose, there are certain regulations that must be followed in order to ensure the transaction is legal.

Home seller and buyer laws

Real estate property disclosure forms: In Santa Clara County, where San Jose is located, anyone selling a home with a wood-burning device must disclose health hazards of particulate emissions. To comply, they must fill out the “Residential Fireplace Disclosure,” which also must be signed and dated by the buyer upon receipt. In addition, sellers must disclose if the property complies with San Jose’s street tree maintenance and replacement requirements using the “Street Tree Disclosure” form. Furthermore, the state of California requires sellers to complete and provide a “Transfer Disclosure Statement” to buyers, informing them of the home’s features and amenities (such as appliances, alarm systems, water source, etc.); condition of said features and amenities; defects and malfunctions of structural, electrical and water components; and issues such as environmental hazards, zoning violations, citations against the property and any lawsuits against the seller that affect the property.

Judicial or non-judicial foreclosure state: In California, foreclosures may be judicial (through the courts) or non-judicial. Most common in California, non-judicial foreclosures enable lenders to utilize a power-of-sale clause in the mortgage terms to sell the home and pay off the loan balance. If there is no power-of-sale clause, lenders can file a lawsuit to get a court order to sell the property.

Community property or equitable distribution: California is a community property state, so each spouse automatically owns one-half of all property acquired during the marriage. Upon divorce, all property is usually divided equally between each party. Community property laws can impact you during the homebuying process, too, as some lenders, particularly for government-backed mortgages, consider spousal debt when evaluating creditworthiness, even if your spouse will not be on the deed or even residing in the property.

Closing process: Some states require buyers to hire an attorney to handle the closing paperwork; but in California, buyers may use an escrow agent, which can be an attorney, title company or other escrow officer, to prepare mortgage documents and clear the title.

Taxes

Summary of real estate transfer taxes: For properties located in San Jose, real estate transfer taxes must be paid at the rate of $1.65 per $500. In addition, Santa Clara County charges a county transfer tax of 55 cents per $500.

Property tax exemptions: In Santa Clara County, homeowners can file for a property tax exemption of $7,000 off the assessed value of the property. The county also provides an exemption for disabled veterans of up to $100,000 off the assessed value. The property must be the principal residence for a qualified disabled veteran (totally disabled resulting from a service-connected injury or disease) or their surviving spouse. For low-income veterans, this exemption increases to $150,000. You can find out more about property tax exemptions in San Jose here.

Typical property taxes: The median property tax in Santa Clara County is $4,694 per year on a home valued at $701,000, according to Tax-Rates.org. Although not the highest property tax in California — that honor goes to Marin County, which collects an average of $5,500 per year — it is one of the highest nationwide.

Conforming loan limits

In San Jose, loan limits for one-unit homes are $726,525. Conforming loans are those that are backed by Fannie Mae and Freddie Mac, the government-sponsored enterprises that help stabilize the U.S. real estate market. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits. The overall conforming loan limit is $484,350, but there are higher limits in pricey areas, such as California.

Programs for homebuyers in San Jose

In an effort to help residents become homeowners, California offers several programs to assist with down payments and/or closing costs.

MyHome Assistance Program

Through this program, borrowers receive a deferred-payment junior loan to be used for the down payment and/or closing costs. This loan may be up to 3.5% of either the home’s purchase price or its appraised value, whichever is less.

To qualify, borrowers must be first-time homebuyers, use the property as their primary residence, have a CalHFA first mortgage loan, complete homebuyer education counseling and meet CalHFA income limits. In addition, the sales price of the home cannot exceed $765,000, must be a single-family, one-unit residence and cannot reside on property in excess of five acres.

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School Teacher and Employee Assistance Program (School Program)

In this program, teachers, administrators, school district employees and staff members who are first-time homebuyers can receive a junior loan for up to 4% of the home’s purchase price to be applied to the down payment and/or closing costs.

To qualify, borrowers must be first-time homebuyers who are employed by a California K-12 public school, charter school, county/continuation school or its school district. Also, they must live in the home, complete homebuyer education counseling and meet CalFHA income limits. The property must be a single-family, one-unit residence located on no more than five acres with a maximum sales price of $765,000.

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Cal-EEM + Grant Program

This program is a combination of the federal, FHA-insured Energy Efficient Mortgage (EEM) and a state-based, Cal-EEM grant that allows borrowers to make energy-efficient improvements.

To qualify, borrowers must use the property as their primary residence, meet CalHFA income limits and complete homebuyer education counseling. The property must be a single-family, one-unit residence that sits on five acres or less. The maximum sales price for the property is $765,000. In addition, the home is subject to a Home Energy Rating System report and must follow FHA EEM guidelines.

Learn more

Rate shopping tips

To ensure you receive the best rate possible on your loan, there are certain steps to take when speaking with lenders.

Contact at least three lenders on the same day

The more lender quotes you can compare, the better your chances of finding the best interest rate. Even a small difference in your rate can save you thousands over the life of your mortgage. Because rates are so volatile, it’s best to contact at least three lenders on the same market day, in order to get a fair comparison. If you compare rates given to you by lenders on different days, it will be impossible to make an apples-to-apples comparison.

Provide the same information to each lender

To get comparable loan estimates, it’s also imperative that you share the same financial information with each lender. This includes paystubs, W-2s, tax returns and bank statements. If your potential lenders don’t all have the exact same information, the quotes they give you cannot be accurately compared.

Add up all the lender fees to confirm the costs

When looking at a loan estimate, fees are listed individually throughout the document and totaled up at the end. Do the math to make sure all the numbers are correct and ensure you understand what your actual price tag will be.

Know when to lock in the rate

Because interest rates change often, the great rate you are quoted today could be gone by the time you’re ready to move forward with your home purchase. To avoid having your own preferred rate rise along with interest rates in general, you can lock it in to ensure you will have the same rate throughout the homebuying process. Rate-lock periods typically last around 30 days. You may be able to file for a rate-lock extension if the deadline passes. What if rates actually go down after you lock yours in? Some lenders may offer a float-down provision that allows you to adjust your rate if that happens.

The information in this article is accurate as of the date of publishing.