Shopping for a new home in California can be very exciting, however figuring out the financing can be both a daunting and nerve-wracking experience. From trying to figure out how much you can actually afford to paying down your debts, there are many things you can do to make the financing aspect of home buying a little easier. In this blog, our realtors will offer up some financing advice so you can be well prepared when it comes time to start shopping for your new home.
At American Dream Realty, we’re proud to be a one stop shop for all of your mortgage and real estate needs. With no upfront costs and competitive interest rates, we offer first-time California homebuyers and seasoned investors a full array of lending services to help them experience the benefits of homeownership. Contact our real estate agents and brokerage professionals today to learn more!
California Home Financing: Figure Out What You Can Actually Afford
Before you start looking online at real estate properties in California, make sure you take the time to sit down and figure out what you can actually afford. Keep in mind that in addition to the monthly principal and interest, you will also have to pay into escrows for property taxes, hazard insurance, and possibly homeowners association fees. There are several mortgage calculators online that can help you figure out what your monthly payments would be based on interest rates and down payment amounts.
California Home Financing: Check Your Credit Score
In order to get a low interest rate on your mortgage loan, you’ll want to make sure your credit score is in good standing. You can obtain a free copy of your credit report each year from the three major credit reporting agencies: Equifax, Experian, and TransUnion by visiting http://www.annualcreditreport.com/. Once you receive a copy of your report, make sure there are no late payments incorrectly listed and that the amounts owed for each of your open accounts are accurate. If you happen to find errors in your report, make sure to dispute them with the credit bureau. Below are some other tips to ensure your credit score is the best it can be.
- Setup Payment Reminders – One of the biggest contributing factors to your credit score is making your credit payments on time. Depending on the bank or institution you owe money to, you may be able to set up payment reminders through their online banking portal so you never forget when a payment is due. If your bank doesn’t offer this service, you may be able to enroll in automatic payments through your credit card or loan providers.
- Reduce The Amount of Debt You Owe – While this can be easier said than done, reducing the amount of debt you owe can help improve your personal credit score. Use your credit report to make a list of all of your open accounts, then go online or check your recent statements to determine how much you owe on each accounts. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest credit cards first. From there, maintain a minimum payment on your other accounts until the most important one is paid off. Continue to prioritize your list as you start to pay off debt!
California Home Financing: Understand The Different Home Loan Options
There are many different types of home loans to consider in California. For the sake of simplicity, we’ve compiled a list of the most common home loans available:
- Fixed-Rate Loans – These are mortgage loans that have the same interest rate for the entirety of the repayment term. This means your monthly payment will stay the same month after month, year after year.
- Adjustable-Rate Loans – This type of loan has an interest rate that will change or adjust from time to time. These loans often change every year after an initial period of remaining fixed.
- FHA Loans– The Federal Housing Administration, or the FHA mortgage insurance program offers loan programs that are managed by the federal government. These programs allow you to make a down payment as low as 3.5 percent of the purchase price.
If you need help financing your first home, contact the mortgage and lending experts at American Dream Realty today!