Buying a home in California, or any state for that matter is a huge thing. Due to its importance, it is only fair to invest time and prepare for the purchase.
Of course, finding a LA mortgage broker could significantly speed up the process. Even with a mortgage broker, this is a valuable opportunity to revisit your finances and work on them.
All it takes is elementary financial literacy and common sense. Patience and willingness to learn to make any effort more profitable.
Getting Finances in Order
Before you even look at the houses in California, get your finances in order. There are fewer chances that you are purchasing at the median house price of $500.000 in cash. Therefore, you have to take a loan or find another way to finance the purchase.
To do that, you need to start with a better-than-average credit score. The better credit score you have the better deal for a loan you may get. Also, lowering your debt-to-income ratio is crucial for this endeavor.
Also Read: 5 Common Home Selling Mistakes
A credit score is the essence of any financial decision. Everything you do or want to directly relates to your financial health and credit score.
Try to understand credit score as an indicator of your financial health and possibility. Credit score ranges from 1-1000. Scores under 300 are poor, 300-600 are fair, 600-750 are good, and over 750 are excellent.
Credit score consists of four metrics, and these are:
- Payment history
- Credit usage
- Length of credit history
- Types of accounts
- Recent activity
Also, credit scores may differ depending on your work industry. But, to get a clear point, visit your credit report and diligently read it. That helps you to plan your finances and get a better deal for your purchase.
Planning your finances means that you sit and write down a plan for buying your property. When you do that, you want to put the following details on paper:
- Current financial situation
- Current savings
- Current financial portfolio
- Current credit score
- The type of property you want
With that information, it is time to assess your buying capabilities. In the best-case scenario, you have a financial portfolio or savings with a high credit score. However, these cases are rare, especially for first-time buyers.
The reality is that for most buyers, that is an ideal scenario. The case here is that you probably need a loan to finance the purchase. Also, that you lack a portfolio and savings and have an average credit score.
In that situation, you want to reduce debt, increase income, and fix your credit score. With that, you are almost ready to find a real estate broker.
Documents and Proof of Stability
Documents refer to reports, papers, permits, and claims you need for the broker. Prepare your credit report. For everything else, contact your financial broker.
Find a Real Estate Broker
You can buy a house without a real estate broker. But you should avoid making that decision.
A real estate broker or mortgage broker can help you find the best deal for your financial situation. And, they can help you during all stages of the purchase.
Rely on Broker
The primary reason to rely on the broker is that finding those homes is their job and a craft. Once you decide to purchase a home, you have to visit banks, agencies and work on finances.
It takes too much time to look for houses, cover various neighborhoods, and personally visit each property. Instead, leave all that to the broker. Mortgage brokers document your preferences and look for a property that matches them.
At least, that is the job description of a professional.
Check Their Credentials
Before you hire any broker, check their credibility. You can do that in several ways. For example, you can:
- Ask around
- Check their testimonials
- Try to find previous clients
- Check their social media
- Check the number of clients they have by year
- Check their report if possible
With that info at hand, have an interview with the broker. Also, make sure to interview several brokers to find the best fit.
Once you get a broker, you can look for opportunities and learn more about the real estate market.
Real Estate Market
Knowing a real estate market is the key to financial success. Being aware of opportunities, available properties, and best deals gives you a tremendous advantage. With a proper mortgage broker, you can get that.
Understanding the Market
You could say that purchasing a property is a two-step process. First, you need the proper finances, and then you need to understand the market. Currently, California is a seller’s market. That means that there are fewer homes to sell than buyers are looking for properties.
In this scenario, sellers raise the median value of the property and are less willing to sell. The chances decrease with better neighborhoods and better properties.
Of course, not all buyers want to buy the same property. Needs determine your choices, and thus your final pick.
In this example, you want to buy a home. For that reason, you want your home to be close to amenities such as:
- Recreational centers
- Wholesale stores
These amenities help you to organize your life. If you are buying a family home, you want to keep your life tight. Of course, there are other things to look at depending on your lifestyle. With that, you are ready to go home hunting and find a way to finance the purchase.
Financing the Purchase
Once the broker is looking for homes, you have to decide how to finance your home. Usually, people buy their first property through a mortgage loan.
You can apply for other loans as well. At this point, your financial calculation becomes clear. Before a broker goes to the market, they have to know what type of home they want.
Type of Home
When people talk about homes, they are talking about housing space and location. These two are valuable factors for brokers. But, to make their jobs much easier you want to think in terms of housing units.
A housing unit is a term that describes a living space capable of housing a family. It relates less to space or the type of housing (apartment, condominium). But, it takes into account that you can house a family within a housing unit.
For example, your broker could look for 2-4 housing unit apartments for you to buy. Essentially, it means that if an apartment complex has 12 apartments, you are looking to buy 2-4 apartments at once.
Depending on that, the broker goes and finds the real estate that fits the description.
Mortgage and Loans
Now that you know what you want, you can calculate the price of your new property. With the average price in mind, start thinking about mortgages and loans. In practice, you often take a mortgage loan to buy a home.
However, you may also take a conventional loan or a jumbo loan to finance your new home. The final decision depends on the whole financial calculation. A buyer with a better credit score, less to no debt, and higher-income may go for a conventional loan.
Buyers with worse credit scores have to fix the score and apply for a mortgage loan. If you want to buy an expensive house (over $500.000) you need a jumbo loan. Once you get the approval for the loan, you may buy the property.
Closing Down The Deal
With the loan, you go to the broker to the house you want to buy. Yet, that is far from the moment to relax. Here, you want to be extra careful. The two steps you want to focus on are checking the property and signing the documents.
Checking the Property
Checking the property is crucial. To check that everything is fine with the house, consider bringing maintenance crews. You want to check:
- Electric circuits
What you want to do is to come to the property and check anything suspicious. The moment you decide that everything is fine, sign the documents.
Signing the Documents
For this step, bring your lawyer along with the real estate broker. Check all the papers and documents for the property. Also, check the person you are buying the property from and their ownership of the property.
If it all turns out legit, sign the documents, buy the home. Congratulations, by this step, you are a homeowner.
Buy a Home in California
Buying a home in California is all about preparation. Get your finances in order, the rights of your documents, and find a proper service.
With such preparation, you can find a perfect property. Make it count, and enjoy spending time in your new home.