If you’re planning to buy a home in California for the first time, then congratulations! As exciting as the idea of home buying may be, the home loan process can be equally overwhelming, especially for first-timers. But don’t worry, we have you covered. We’ll walk you through the California mortgage process in today’s post. This will help you understand the process and prepare for it better. Let’s get started.
Here are the series of steps involved in the home loan process in California. Take a look:
Before you start your home buying journey, start your savings early. Your savings matter. This is because when you get a mortgage loan, you will incur some out-of-pocket costs. For example, the down payment which can be 3 percent or more of the purchase price. There are also closing costs and fees, which can range to anywhere between 2 to 7 percent of the purchase price. Therefore, save early to improve your success chances. If you’re having problems saving up for a down payment, speak to one of our loan officers today to see what your options may be. You might qualify for a down payment assistance program, or put a plan together to help you get to where you want to be.
It is crucial to decide on a monthly housing budget before you start applying for a loan. This is much needed to ensure you don’t opt for something you can’t pay for in the long run. You don’t want to be “house poor”, meaning all you have is enough money every month to cover your house expenses.
The next step is to get a pre-approval. A pre-approval confirms your creditworthiness to the seller without buying a purchase contract. Moreover, it gives you, the potential buyer, an advantage in the real estate market. As a lender provides this letter, it shows the real estate agent and the seller that you’re a serious home buyer and qualified. It further increases your chances of securing the purchase.
It’s nothing complex. The lender will pre-approve you after asking a few questions related to your finances and reviewing your income documents and bank statements.. They will review your credit reports to see your payment history, credit accounts and credit score to estimate your creditworthiness.
Furthermore, based on your credit standing, expenses and income, the lender will know what you can afford to pay when buying a new home. Once you know what is affordable for you, it will save you time in finding a home that is within your price range. The seller will also see you as a qualified and serious buyer. All this will make the process of home buying fast and EZ.
When submitting your application, make sure you are organized. For this, gather all the documents needed for mortgage pre-approval. Documents include tax returns, W-2 and 1099s, bank statements, and pay stubs.
Also, use a standardized form called the URLA (Uniform Residential Loan Application) or Fannie Mae Form 1003 to submit your application. We have a user friendly online 1003 that you can utilize once you’re ready. By preparing in advance, you can significantly lower the stress and make an offer confidently.
Once you get a pre-approval letter and have a budget in mind, you can begin hunting for your dream home. Shop confidently within your price range so that you don’t buy a home based on your emotional or personal liking and eventually exceed your budget. Put simply; it won’t let your emotions get the best of you.
We recommend that you work with a highly experienced realtor in your area to speed up the process. If you don’t have one in mind, ask us, and we’ll be happy to recommend a few to you. They can use their experience and provide you with current listings to help you view complete details of homes for sales in the neighborhood or locality you wish to make your purchase.
Once you find your dream home, the realtor will make an offer that appeals to the seller on your behalf. The real estate agent understands how to structure the proposal, including contingencies that should be completed before the deal is closed. This includes:
All this is essential because contingencies protect the buyer and their earnest money. Earnest money is a deposit that confirms to the seller that you’re an eligible and committed home buyer. Moreover, once the terms of the home-buying deal are approved, both parties must sign the purchase agreement to move forward to the next step.
Normally you want to work with the lender who preapproved you; they already know you and the process will be fast. Your lender will explain the different types of mortgages like Conventional, FHA, Jumbo, and VA, to name a few. Also, be ready to furnish updated documents as needed. The paperwork you provided during the preapproval process would recently be out of date by now.
At this stage, the lender will provide a loan estimate summarizing the following:
At this stage, the loan processors collect all your information and documents from the lender and about the property, which is assembled into a loan package. It is then sent to the underwriter, who reviews the package and decides whether to reject or accept the loan application. Please note, if the application is approved, the next step is to lock the loan interest rate. There will also be an appraisal and an inspection conducted on the property to ensure you are purchasing a home that’s worth the asking price.
Before closing, we have the pre-closing step. This is when the title insurance is ordered, and it is ensured that all the contingencies are satisfied. Next, the closing is scheduled.
Finally, you’re all set to go to the closing table and sign the documents to realize your homeownership dream. When you come for closing, carry two forms of ID and schedule time with the escrow officer to discuss the process after ownership. This is the last step when getting a home loan in California.
For more information or assistance with the home loan process, contact us. We are experts and can help you smoothly and seamlessly navigate the process.
It’s time to start thinking about taxes as the calendar turns to a new year. That is, especially if you’re a homeowner with a mortgage. Proper preparation can help you make the most of tax benefits related to your mortgage. Thus, potentially saving you money in the long run. In this article, we’ll explore essential […]
Mortgage: Get ready for the Tax season – EZ fundings Read More »
Acquiring a house is an important turning point in life. It entails obtaining a home loan for the majority of us. Thus, knowing the essential advice for a seamless home loan journey is essential whether you’re an experienced real estate investor or a first-time home buyer. We’ll go over some crucial advice in this post
Home Loan Journey: Tips for a Seamless Experience Read More »
In the dynamic landscape of real estate, the emergence of Accessory Dwelling Units (ADUs) as separately sellable entities has created new opportunities for borrowers. This paradigm shift will have a profound impact on borrowers’ financial landscapes. The following are the opportunities with ADU separation. Higher Property Value For homeowners, the ability to sell ADUs separately
Opportunities with ADU Separation: Impact on Borrowers Read More »
Buying a home is an exciting journey, but it can also be a complex and overwhelming process. One crucial step in the home-buying process that can make your journey smoother and more efficient is obtaining a mortgage pre-approval. In this article, we will explore the importance of mortgage pre-approval, its key differences from pre-qualification, what
Mortgage Pre-Approval: Why It’s Essential and How to Get It Read More »
The down payment can be a significant barrier for many prospective buyers when it comes to purchasing a home. Traditional wisdom often suggests aiming for a 20% down payment to secure a mortgage with favorable terms. However, this substantial amount is out of reach for many individuals and families. Fortunately, there are alternative low down
Alternative Low Down Payment Options for Mortgages Read More »
Selecting the appropriate lender for your mortgage is essential when looking to secure financing. The conditions of your loan and, ultimately, your financial situation, will be heavily influenced by your lender. When choosing the right mortgage lender, take into account these five important factors to make an informed decision. Interest Rates and Loan Terms The
Choosing The Right Mortgage Lender: Five Factors To Consider Read More »
A recent CNBC report reveals a startling reality: while most people believe they need an average of $1.3 million saved for retirement, the actual savings for many individuals hovers around a mere $89,000. This significant shortfall is likely to force people into extending their working years or facing an uncertain retirement. However, there is a
Debt Consolidation: Paving the Way for Your Retirement Read More »
Securing a mortgage the usual way can often be a challenging process for aspiring homeowners or real estate investors. However, an emerging trend in the mortgage industry is providing hope to individuals in such situations. The introduction of 90% loan-to-value (LTV) bank statement programs has opened doors for borrowers to achieve their homeownership dreams. In
90% LTV on Bank Statement Programs | Definition, Benefits & Considerations Read More »
In today’s robust buyer’s market, with a wide array of housing options and stable interest rates, many aspiring homeowners are eager to make their dream of owning a home a reality. However, traditional mortgage products may not accommodate everyone’s unique financial circumstances. This is where Non-QM (Non-Qualified Mortgage) programs come into play. Non-QM offers a
Understanding how contingencies empower home buyers in today’s market is crucial. Contingencies are contract clauses that allow buyers to back out or negotiate repairs based on conditions. They provide safety nets, protection, and flexibility throughout the homebuying process. Let’s explore the importance of contingencies in today’s buyer’s market, their benefits, and when it’s safe to
Contingencies in Today’s Buyer’s Market Read More »
