Know These: Before Buying a House in California

1. Budgeting-Budgeting for a CA home is the first most important step. There is no point wasting time and energy in house hunting before you know what you can afford. Therefore, the first step is to assess your finances.

2. Get pre-qualified for loan-Banks, mortgage lenders finance loans and mortgage brokers process them. Fill-up an application with all documents, and see how much you will get as loan and what is the processing cost. Compare and bargain between different mortgage brokers. 3. Consult your lender, if you have a bad credit-Your lender is able to advise you, whether your credit history will prevent you from qualifying for a loan or not and what are the alternatives.

4. Different mortgage types-With so many options available for CA mortgage loan types, it is important to determine if you are a risk taker or prefer more stability in financial dealings.

5. Down payment-It varies with the type of loan you are taking. Many down payment programs exist in CA. Consult your lender for assistance.

6. Closing costs-It varies from transaction to transaction, from area to area. These are the charges for services related to the closing of your real estate transaction. These include escrow fees, property tax, homeowners insurance, loan originating fees, title policy insurance etc. You can get a loan for financing the closing costs.

7. Mortgage interest rate-As you start shopping for a home loan, CA mortgage interest rates will become an important factor in your new home?s affordability. If rates are high, it is wise to take an adjustable rate of interest, since subsequent rate drops will reduce your monthly payments. If rate of interest is low, take a fixed rate to protect yourself against the possibility of rising.

8. Special programs for low/moderate income homebuyers-These loans are available through private lenders, as well as local and state housing agencies in CA.

9. Government loans-Apart from conventional loans, this includes Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans and Veterans Administration (VA) fixed rate mortgage loan.

10. Points-A point is a loan origination fee or commission. Some lenders charge lower interest rate with high points. Compare between various lenders while shopping home.

Before you make your mind to buy a house in CA, go with these points in detail to avoid inconveniences later.

Posted by Kim Hoots on December 13, 2008 at 12:00 AM

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