The Fool's Guide to San Diego! April 2025 Newsletter

We all want lower interest rates—but have you considered what happens when they do?

Let's review our recent history.  Over the past year and a half, rising rates, combined with increased inventory, have slowed the aggressive climb in home prices.  But what happens if rates take a significant dip?  While they won’t drop overnight, a decrease would immediately bring a wave of buyers back into the market, armed with more buying power.  More competition means bidding wars, and bidding wars mean rising prices.  We've already seen some bursts in loan applications this year, as the rates have dipped to the low 6%s and even a smidge below that. 

The takeaway?  Don’t wait for the rates to drop to 3% again.  It might never happen.  A 6% interest rate is the new normal.  If you’re thinking about buying, now is the time to get pre-approved and start your search before the market heats up again.  Not to mention, we've been negotiating some pretty awesome deals and cash back for our buyers recently!

Let’s talk strategy! Whether you’re ready to buy now or just want to explore your options, we'd love to talk about it! 📩📞"

Time flies!  It feels like just yesterday that Kyle (Jim's oldest) went off to college.  However, that can't be true...  because this month Kyle is graduating with a Bachelor of Science in Software Development from Grand Canyon University in Arizona!  We're so proud of the graduate!

This month also marks 15 years of Jim in real estate, and we all know that this "duo" would be a "zero" without Jim & his seasoned experience!  Our business is not for the faint of heart, but Jim's constant dedication to the industry, his agents, and his clients has changed many lives for the better.

When you purchase a property in CA and put more than 20% down, you have the option to escrow your property taxes and insurance. If you choose to escrow them, your lender will build the costs into your monthly payment of PITI (Principle, Interest, Taxes, & Insurance).  If you choose to pay them yourself, your monthly payment to the lender only consists of PI (Principle & Interest).  

So, which way is better?...

It's a personal preference!  There are ✅ pros and ❌ cons to both. 

Escrowing Taxes & Insurance
✅ Convenience: The lender handles payments, so you don’t have to worry about due dates.
✅ Budgeting: Payments are included in your monthly mortgage, making expenses predictable.
✅ Avoids Late Fees: The lender ensures taxes are paid on time, preventing penalties.

❌ Less Control: You rely on the lender to make your payments.
❌ Higher Monthly Payment: Your mortgage payment feels more expensive.
❌ Escrow Adjustments: If property taxes or insurance increase, your lender may adjust your monthly escrow amount, sometimes leading to unexpected increases.

Paying Taxes & Insurance Yourself
✅ Full Control: You decide when and how to pay, as long as it’s before the deadline.
✅ Potential Interest Earnings: You can hold onto your money longer and earn interest in a savings or investment account.
✅ Lower Monthly Mortgage Payment: Your mortgage payment is lower from month to month.

❌ Lump Sum Payments: You pay larger bills (twice a year for taxes in CA).
❌ Risk of Forgetting: Missing a deadline can result in late fees or even a tax lien.
❌ Requires Discipline: You must set aside money consistently.

The Bottom Line
Escrowing is great for those who prefer convenience, automatic payments, and predictable budgeting.  Paying taxes & insurance yourself is ideal for disciplined homeowners who want control and the ability to manage their cash flow more flexibly; it's great for people who get paid in lump sums, like us business owners!

It ultimately depends on your financial habits and comfort level with managing large, periodic payments. Would you prefer the predictability of escrow, or do you like the flexibility of handling it yourself?