Briefly, I don’t like the math. I simply wouldn’t do a 90-95% LTV on a condo in San Diego in this environment. Even if you are sure you will stay long enough to break even or perhaps do better, I would save for a year or two to get the down payment percentage up to 20%. In the meantime, prices are due to continue dropping. That 20% is likely to be 20% of a much nicer place in a year or two. And this way you have no second mortgage (if you can even get one) and no PMI, a nicer place, and a much more reasonable equity cushion. Assuming reasonable habits and income growth, you can pay the thing off in your 10 year window (that may be true either way).
Another observation: How many people here bought their first place, and expected to live in it much longer than they actually did? I know I’m raising my hand right now. The market is likely to encourage you to stay put far more than it did me, but there are many unforeseen reasons for which people end up moving. Just sayin’…
