Buying a home in Orange County is an exciting experience and the most important investment you can make. When buying a new home, visit our calculator page for assistance and use the guidelines below to help qualify for the best home mortgage loan rates and terms available:
- Know what you can afford.
- Many California loan institutions require the mortgage payment for new home buyers not exceed 30% of your gross income. Look carefully at what qualifying earnings of yours can be proven with bank balances, pay stubs, and financial statements if you are self employed. Compute the loan principal that 30% of your combined monthly family income will carry, at prevailing interest rates. Divide the loan balance (or mortgage amount) by 80% - 90%. The resulting figure will approximate the sale price of the home you will buy with a 10% to 20% down payment. The difference between this figure and the loan balance equals the size of the down payment needed. If you have a down payment - this is the price range of homes you should be looking at.
- Know your credit rating and all its 'dings'.
- Be sure to review your credit report for errors and "dings" before applying. This takes time to correct negative items - though you can often attach a letter of explanation with the loan package to reduce the negative impact of the derogatory item on the loan application outcome. Regardless of credit dings, American Capital Lending can help you obtain a loan under the most favorable terms possible. To review your current credit profile, visit our Credit Check page so you can start the process fully informed.
- Keep your debt and monthly payments as low as possible prior to applying.
- Along with your income and credit history, the underwriters are going to evaluate the total debt load you must service. The higher your outstanding debt and greater your aggregate current monthly debt payments are, the less chance you have of receiving the loan you want.
- Remember the "cost of owning" a home when planning your household budget.
- Along with the mortgage payment, a home has property taxes, several types of homeowners insurance, maintenance and repairs as part of the total cost equation. Plan these mortgage loan factors into your budget when considering a price range for your new home and new home loan.
- Save for repairs and upgrades.
- At some future point, your home will be more valuable than when you purchased it. As a future selling homeowner, set aside a small amount each month for home improvements. Use one of the calculators to see how much remodeling money you can accumulate in 5 years - just by setting aside $200 per month.
- Be cautions about what you say to the selling real estate agent.
- As a home buyer, unless you have a "buyer agency agreement" with a Real Estate agent, the agent is working for the selling homeowner - the Seller. Whatever you say to the agent (when discussing offers, for instance) - that agent is obligated to pass along to the selling homeowner, his Listing.
- Shop your loan before you make an offer.
- Find a loan agent or loan broker you feel comfortable with. Spend time with this agent explaining your financial situation and what kind of home and area you are hoping to own in. Your loan can be largely pre-approved, subject to certain conditions (LTV, personal income to debt ratio, etc.) before you make an offer. Getting a "pre approval" letter will help authenticate your offer and, although it doesn't happen often, if the seller knows that you are pre approved and the pre-approval amount is for a certain sum - this can be used to leverage an impatient seller's price down into your targeted home price range.
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