SANTA CRUZ (April 6, 2008) - The first step to becoming a homeowner is simply having the desire to learn more. Education and knowledge will lead to a well thought-out decision about whether or not you should become a homeowner and when it would be prudent to do so. Owning a home is certainly not for everyone and even if you determine that you want to own a home, now may not be the best time for you.

Assuming that you have come to the decision that you want to live in Santa Cruz County, the best place to begin your quest for knowledge is with a mortgage professional. Since the mortgage industry has gone through a significant and far reaching transformation since the official beginning of the meltdown in August of 2007, meeting with a mortgage person who specializes in placing mortgages with a wide variety of lenders will give you the best overall picture of what is currently available and what you will qualify for.

When comparing the 1472 sales of single family homes in Santa Cruz County in 2007 with the peak year of 1998 when 2679 homes sold, I have got to believe that there is a buildup of fence-sitting prospective home buyers who want to live here but have chosen to wait. The mortgage options that were available in 1998 are not dissimilar to what is available today. Purchases required 5 - 10 percent down payment, strong credit was required to get a good loan, Prime Rate was 3 percent higher than it is today and 30 year fixed rates were about 1 percent higher. Underwriting guidelines then were as strict as they are today.

My sense is that prospective homebuyers are waiting for home prices to go down some more. In fact, some home’s values still have room to fall and I am certain that there are desperate home sellers that will be lowering their home prices even more. Ideally, everyone would like to buy at the bottom of the market but few are likely to be able to pinpoint that moment. When the market does start to move upward in earnest, sellers will not be so willing to negotiate and more than likely mortgage rates will not be as low as they are today. If you are buying a home to live in for at least 4-5 years, find a home you like and can afford, make the best deal you can with the seller and then be prepared for fluctuations in value before the value starts going up again.

Although it is more difficult to qualify and obtain a mortgage than in the very recent past, borrowers with sound credit, sufficient income, steady employment and enough cash for a 10 percent down payment will be able to obtain a good mortgage with historically low rates. Some first time homebuyer programs and FHA will allow a smaller down payment.

Those interested in finding out more should plan on attending the Santa Cruz County Housing Expo on Saturday, April 12. It is sponsored by the Santa Cruz Association of Realtors, several local lenders and others. Speakers will be covering topics on the homebuying process, real estate investment, ‘green’ real estate and foreclosures. This event was well attended last year and will be held at Twin Lakes Church at 2701 Cabrillo College Dr in Aptos. There is no charge. For more information call 464-2000.

This column is written every Sunday by Peter Boutell, Certified Mortgage Planner and a principal at Santa Cruz Home Finance. You may reach him at (831) 425-1250 of email him at Peter@SantaCruzHomeFinance.com.