For most people, buying a home is the biggest purchase they will make in their lifetime. If you’re brand new to the homebuying process, it’s important to work with a certified real estate agent to ensure you’re getting the best deal for your dollar. At American Dream Realty, we’ve helped hundreds of people and families find the perfect California home at an affordable price, offering a one-stop-shop for all of your mortgage and real estate needs. With all of the different factors that can go into getting a home loan, getting approved for a mortgage can be extremely stressful. Luckily, the realtors at American Dream Realty have come together to discuss the home loan and mortgage process so you can be well prepared when it comes time to purchase a home.

What Is A Mortgage?

Whether you plan on purchasing a home in Simi Valley or Woodland Hills, it’s important to have a thorough understanding of the home loan and mortgage process. In layman’s terms, a mortgage is a loan specifically used to buy property. The amount of the loan is typically a fraction of the price of the total property value. In order to make loans less risky for lenders, loans are tied to the property itself. This means that if the loan goes unpaid, the lender will typically take ownership of the property, which they have the option of selling to cover debt.

How Does A Mortgage Work?

Once a prospective homebuyer comes across a property they would like to buy, they’ll likely need to acquire a mortgage from a lender. This may be a banking institution, credit union, or something of the like where they can borrow money. In order to better understand the mortgage process, let’s take a look at a few key players.

Borrowers

This could be you! If you have your eye on a two-bedroom, two-bathroom house in a great California neighborhood, you may need to borrow money from someone to make the transaction happen.

Lenders

Lenders are the people or companies that lend you money to make your home purchase. There are many rules and guidelines surrounding how a lender can lend money, and these companies often follow highly technical processes since most of them are big banks and large mortgage companies. If you need assistance finding a lender for your home loan, contact the professionals at American Dream Realty today. With more than 17 years of experience in the California real estate market, we can help you find the home of your dreams at an affordable price.

Servicers

Servicers are the people who are in charge of collecting the monthly mortgage payments. Many lenders work with companies called “mortgage servicers” to handle the payment collection, acting as a middleman between the borrower and the lender. A mortgage servicer will make sure the money goes to the right place.

How Do My Personal Finances Affect The Home Buying Process?

At American Dream Realty, we understand that each homebuyer is different. If you’re a first-time homebuyer looking for property in California, there are many things that can affect your home loan and mortgage process. Let’s take a look at some of the most important factors that can have a tremendous effect on your home loan.

Your Credit Score

Do you know your credit score? If not, you should make a point to check it soon. There are many free online tools that will allow you check your credit score without negatively affecting it. This will help give you an idea of where you stand when it comes to applying for a home loan or mortgage. Many mortgage lenders require a minimum credit score to lend money, so it’s important to make sure you’re well aware of where you stand before looking for houses to buy. The higher your credit score is, the less risky you are as a borrower and the better interest rate you’ll get.

A credit score above 780 will generally get you excellent rates, but if you have a low credit score you can work with a credit counselor to improve your score. It’s also worth noting that different lenders use different calculations to determine your credit score. For example, your FICO store for your auto loan is different than the score for your credit cards and mortgage.

The Costs Associated With Home Buying

While most conventional loans require a 20 percent downpayment, many home buyers don’t realize there are a handful of additional closing costs associated with buying a home. One of the best things you can do to prepare to buy a home is to be diligent about saving money. Whether you seek out ways to reduce your current debt or work with a financial advisor to consolidate debt, there are a variety of things you can do to improve your chances of getting a home loan. Refinancing is often available for student loans, as well as consolidating credit card debt, which can have a positive impact when the time comes to purchase a home.

If you’re ready to start looking for your dream home in California, contact the certified real estate agents at American Dream Realty today. With more than 17 years of experience in the real estate market, our professionals can help you find a home that meets your needs and budget. Search our local listings online or contact our realtors today to learn more about our services!