Beach Cities Real Estate Home Loans – Buyers: Getting Started

Buying a home, condo or investment property in a beach city takes a lot of work.  Do you have a good lender or loan officer to refer too?  As a home buyer, you are encouraged to talk to a lender ahead of time to help them get focused on what they can afford and what the monthly payment will be.  Then, shopping for a home is easier.

Plus, home sellers only want qualified buyers viewing their homes for sale.  They take pride in cleaning the house and getting it ready for you to view it with Jay Valento.  Being qualified makes them feel good about putting in the extra work to make the house look great for you.

Pre-qualifying for a home loan for your beach house or condo:

1. Your lender will give you an estimate of what you can afford purchase price wise based upon how much you earn
    
2. You will know in advance approximately what your payments will be if you choose to make an offer. 
    
3. Pre-qualify status usually means that your credit has not been evaluated by the lender so, they are just estimated based upon what you have told them.

    

Pre-approval will help you in the following ways:

1. You must fill out a loan application with the lender.
    

2. They will run your credit to determine your credit score.
    

3.  They certain bank documents and your monthly expenses to review.
    

4. Review with you all of all of the loan programs that your credit and income qualifies for.
    

5.  A Lender / Loan Officer can tell you what your maximum purchase price would be and give you an estimated monthly payment.
    

6. By taking care of this in the beginning, you can select the best loan package without being under pressure…if your offer just got accepted and you were only pre-qualified. 
    

7. Sellers tend to value your Pre-Approval status higher than a buyer who is just pre-qualified.
    

8. Most of lenders will shop for the lowest rates and terms based upon your situation and credit score. 
    

9. You won’t waste time looking at homes you cannot afford.
    

Learn more about the many factors that determine loan approval….get this process done before researching for homes online.  It will save you hours of time.

How much home can you afford will depend on 3 key factors:

• The down payment
• Your ability to qualify for a mortgage which includes your credit score, your income and debt or monthly expenses that create a ratio.
• The closing costs associated with your transaction.  
  

Down Payment Requirements:

• There are 100% financing programs out there but your credit score has to be excellent.  Most loans  require a down payment.  It could be between 3.5% and 5.0% depending on the type of loan and the terms of that loan.  The more money you put down the better.  If you are able to come up with a 20-25% down payment or more, in most cases you can avoid paying private mortgage insurance.

Make sure you discuss all financial matters with your lender.  We have some references for you in our  home loan and mortgage center.

Closing Costs:

It is kind of like sales tax but they cover fees for the escrow company, loan fees if any, title insurance and other fees required by law to record your property.

These fees must be paid in full at the final settlement (usually 5 days before the close of escrow), unless you are able to include them in your financing. Typically, total closing costs will range between 2-5% of your mortgage loan.  If you hire a buyer broker to represent you and you ask them, they will try to negotiate closing costs with the seller so that the seller pays for it.  It is possible.

How to Qualify for the Mortgage

Most lenders require that your monthly payment range between 25-28% of your gross monthly income. Of course, there is flexibility with the percentages.  Your mortgage payment to the lender includes PITI, which stands for: 

• The principal on the loan (P) 
   
• The interest on the loan (I)
   
• Property taxes (T), in southern California, for the most part, property taxes are 1.25% of the purchase price.  There are some areas, usually newer subdivisions, that have a special assessment tax called “mello roos”.  It is a tax to pay for new schools, utilities, etc.  Mello roos property taxes may be up to 2% total.
   
• The homeowners insurance (I) – this protects your property against fire, damages to your property as well as liability for injuries and damage you cause to other people.  Talk to your insurance agent for more details.

We can have a friendly lender contact you today: