California First Time Home Buyer Guide
If you're planning on buying a house in California, we can help you prepare. There are some important steps to consider when looking for your dream home. How much house can you afford? Will you want to apply for a mortgage? Our California first time home buyer guide will help you answer those questions. Read our 5 essential tips for buying a house in California to learn more about current California mortgage rates, how to apply for a mortgage and more.
5 Tips for Buying a House in California:
1. Understand California Mortgage Rates
4. Utilize Home Buying and Home Selling Services
5. Prepare Documents for Your Application
Buying a House in California
1. Understand California Mortgage Rates
Paying for real estate with a mortgage makes buying a home more affordable by spreading out the cost over many years rather than requiring an upfront payment. Buying a house might be one of the biggest financial decisions you make so it's important to do your research. There are various types of home loans you can choose from.
Common types of home loans:
- Conventional loans
- Jumbo loans
You'll want to understand the different kinds of home loans that are available so you can find the right choice for you.
Jumbo and Conventional Loans in California
Jumbo and conventional loans are two types of financing a Californian should know about. While they all may be used for buying property, these loans are inherently different.
A jumbo loan is used to purchase properties with higher prices such as million-dollar homes. This exceeds the maximum amount backed by enterprises like Fannie Mae or Freddie Mac. Since California has a competitive real estate market and higher-priced properties, jumbo mortgages are more common in this state than elsewhere. Read the Consumer Financial Protection Bureau's information on jumbo loans to learn more.
A conventional loan in California can either conform to government guidelines or they can be non-conforming. California is one of 20 states that have designated high-cost counties and higher maximum loan limits. In fact, 14 of the 58 counties in California have loan limits of above $700,000 for a single-unit home due to their competitive housing market. If you want to purchase a high-cost home that falls outside the maximum federal loan limits, you may want to consider a jumbo loan or a non-conforming conventional loan from a private lender like a credit union. Read this article to understand more about California conforming loan limits by county.
Getting to know what California's current mortgage rates are will help you make an informed decision about whether you want to apply for a mortgage. The type of loan you apply for will depend many aspects including the price of the property you want to purchase and the rates you qualify for. Use this helpful tool on Consumer Finance's website to learn about current California mortgage rates.
Cal Coast offers several different home loans designed to fit your financial situation. Find out more about Cal Coast's mortgage options.
2. Use a Mortgage Calculator
A mortgage calculator can be helpful if you're planning on buying your first house or if you're ready to refinance your current home. Your interest rate is an important factor in determining your monthly payment. It is also affected by your down payment, the location of the property, the term of the loan and other factors.
A mortgage calculator is a free tool that can help you make a smart financial decision. To use a mortgage calculator, you will need to provide some information.
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Information needed for a mortgage calculator:
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Mortgage interest rates will also change based on your financial situation. This type of calculator will help you see estimates for mortgages with different interest rates.
Learn more about what your monthly mortgage payments would be with Cal Coast's mortgage calculator.
3. Know Your Credit Score
When you apply for a mortgage, your credit score will help determine what interest rate you qualify for. Your credit score is based on your credit history, including your total debt and whether you pay your bills on time.
Lenders use credit scores to determine whether you qualify for a mortgage and what terms you're offered. Lenders will have increased confidence in your ability to make payments on time if you have a higher credit score. It may even reduce the down payment you are required to pay.
Credit scores can range from a low score of 300 to a high score of 850. Generally, lenders consider 670 and above to be a good credit score.
Improving your credit score could save you thousands of dollars in interest payments throughout the life of a home loan.
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For example: If you plan on getting a 30-year fixed-rate mortgage at $300,000, a higher credit score could save you more than $93,000. |
Read our article on free credit report options to learn more about how to check your credit score.
4. Utilize Home Buying and Home Selling Services
Buying or selling a home can be a positive experience when you draw from the advice of professionals.
Real Estate Agents
A real estate agent is trained and licensed to help you find what you're looking for based on your price range and preferences. They also have skills in negotiating purchases and know the required paperwork you'll need to make an offer on a house.
Listing Services
A real estate listing service is a database created and maintained by real estate professional. Listing services can be useful if you are looking for a home in a specific city or neighborhood. Generally, users can set up alerts to help you find new listings as they are posted.
Cal Coast offers a home buying and selling service for Southern California listings. This listing service is one of the many benefits offered exclusively for Cal Coast members, providing access to a 20% commission rebate if you buy a home through the program.
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For example: A house's sale price is $500,000. The agent's commission is $15,000. A commission rebate would save you $3,000. |
Listing services and real estate agents are often connected to a network of lenders. After you've made an offer on a house and you're ready to apply for a mortgage, you may be able to utilize their network to help you find a lender with rates that fit your needs. You may want to shop for a mortgage for some time before you settle on the best one for your situation. Be prepared to compare and negotiate mortgages during this process.
5. Prepare Documents For Your Application
Let's say you've found your dream home. It meets all your needs, preferences and your budget, and the seller has accepted your offer. Now you'll need to apply for a loan. First, you'll need to choose a lender and complete an application.
Find out more about Cal Coast's competitive home loan rates.
Your lender will need to verify your overall financial situation with a variety of documents. We've outlined 6 most common documents that lenders will need to understand your creditworthiness, employment history, and the sales agreement with the seller of the house.
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6 Documents Needed for a Mortgage Application:
For additional required documentation visit our Home Loan and Home Equity Checklists. |
Get Expert Advice from a Cal Coast Financial Coach
Buying a house in California could be an exciting new venture for you. With these helpful tips, you'll be more prepared to make this significant financial decision. For first time homebuyers, navigating the home buying process is easier when you have the advice of experienced professionals.
Taking on a mortgage is a big commitment, but it can make the purchase of your home more achievable by spreading out the cost over time.
If you'd like the personalized advice of a professional, you can schedule a one-on-one appointment with one of our Financial Coaches. Financial Coaching is free for Cal Coast members. Visit our membership and benefits page to learn more about the perks of becoming a member of Cal Coast Credit Union.
