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Questions?
Call (714) 904-9741
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If you're the buyer, you are probably going  to take out a mortgage on your new Huntington Beach home. Even with good credit, qualifying for the loan you want - your terms, your amount - can be a trying affair. You may want to have your real estate agent introduce you to the loan broker or lender they use most often. It is likely that your representative from this funding source will give you good service because they rely upon your real estate agent for a continuous stream of new deals. Always check first with a loan officer wherever you do your day-to-day banking! Your regular banker already knows quite a bit about your financial profile and may not be at all happy to see you go elsewhere for a loan. And he or she may work harder than anyone else to keep your business in-house. But always compare the terms and conditions of whatever loan proposal they make with what other sources of mortgage loans are offering. Don't trust that it is the best deal available. If your banker does not seem at all interested in making you a loan, you might consider moving your accounts to someone who IS interested in lending you money to buy a home.
Here are some general guidelines to follow when applying for a loan:
- Know what you can afford.
- Most banking institutions will not grant a home loan if the mortgage payment exceeds 38% of your gross income, before considering what your indebtedness is. Take a realistic look at what earnings of yours can be substantiated with pay stubs, bank balances, and financial statements if you are self employed. Using the "Calculator" function on this website, compute the size of the loan that 38% of your combined monthly family income will carry at prevailing interest rates. Divide the total amount of the loan, or mortgage amount, by 80% - 90%. The resulting figure will be approximately 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 down payment you must come up with. Assuming you have the down payment, this is the price range for homes you should be looking at. If you don't have the down payment, see whether you qualify for an FHA or VA government loan.
- Watch what you say to your real estate agent.
- If you are working with the real estate agent who is also the listing agent on the property you are considering buying, the agent is working for the seller. Whatever you say to the agent -- when discussing offers for instance -- that agent is obligated to pass along to the seller.
- Know your credit rating
- Check your credit rating for errors and derogatories before applying. It takes time to correct reporting errors on your credit file, and where negative items exist, or "dings," you can often attach a letter of explanation with the loan package that will reduce the negative impact of the derogatory item on the loan application outcome.
- 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 smaller chance you have of receiving the loan you want. So don't go out and make any major purchases prior to applying for a home loan.
- Remember the cost of owning a home when budgeting.
- Along with the mortgage payment, a home has taxes, several types of homeowners insurance, and maintenance and repairs as part of the total cost equation. Plan these 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, it is likely that your home will be more valuable than when you purchased it. Rather than increasing the loan balance to pay for remodeling, set aside a small amount each month for future home upgrades. Use one of the calculators to see how much remodeling money you can accumulate in 5 years, just by setting aside $200 per month.
- 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 (Loan-To-Value Ratio, personal income to debt ratio, etc.) before you make a formal offer to buy. Although it doesn't happen often, sometimes if the seller knows that you are pre-approved and the pre-approval amount is for a certain sum, this can be used as leverage to lower an impatient seller's price down into your targeted home price range, but not in extremely hot Sellers' Markets.
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