Guide for mortgages in California

If you are going to buy a home in California, you are going to need a mortgage, unless you have a store of money lying around to use to pay cash for your home. Before you sign on the dotted line for your mortgage, make sure you know what you are agreeing to. After all, your mortgage is a long-term financial agreement, so you should know as much as you can about it at the outset.

Basic Structure of a Mortgage

Since most people do not have the cash stores necessary to pay for a home in full, they will usually borrow money from a lender for the purchase of the home. The property in question is the collateral for the loan, which means that the bank or lender has the right to take the home if you do not pay the loan according to its terms.

A mortgage is considered an amortized loan. This means that you have a set number of years in which you must pay back the loan and the interest on it. In California, most loans are amortized for around 25 years, but this can vary based on the loan structure. The amortization period is separate from the term, which is the period that the interest rate is guaranteed. Sometimes the term and the amortization period are not the same, which means you will need to negotiate a new mortgage term when the first one is over.

Finally, a mortgage has an interest rate applied to it. This is the percent of the total loan amount that you will pay to the bank for the privilege of borrowing the money. Your goal should be to find a loan with the lowest possible interest rate.

Getting Approved

Once you have decided that you wish to buy a house, it is time to get approved for a mortgage. Shop around to find a lender with good rates, and then apply. Your approval will be based on the size of the loan, your credit rating, employment history, and current income, among other factors.

Making a Down Payment

Most lenders require you to make a down payment on the property you wish to buy. This shows them that you are responsible with your money and have a good intention of paying what you owe on the loan. It is generally recommended that you put down a 20 percent down payment. You can put down more if you wish. You can also put down less, but if you do you will have to buy mortgage insurance.

What is mortgage insurance? Under the Californian Bank Act, federally regulated lending institutions, with a few exceptions, cannot provide loans that exceed 80 percent of the value of the home without purchasing mortgage insurance. This insurance protects the lender against the possibility of default, which statistics have shown is more likely when the borrower does not place at least 20 percent down on the home. The premium on the insurance policy is typically determined based on a percentage of the home's purchase price. You will typically pay this premium as part of your loan payment each month. This allows you to purchase a home with as little as 5 percent down.

Mortgage recap for 2008

One big mistake many homeowners make when they begin having problems paying their mortgage is to try and solve the problem alone. Or worse, some people simply ignore it; hoping that things will improve. These are actions that lead to bigger problems down the road. Ignoring the fact that you cannot meet your mortgage obligations may lead to losing the house and damaging your credit.

Once it's obvious that you have problems with payments, the prudent thing to do is to contact your lender. Mortgage companies are not interested in owning property; they want the returns from loans and will most often work with homeowners to find solutions.

Despite all the gloom and doom, foreclosure, or the threat of it, isn't the end of the line for homeowners. There are ways to weather the storm. Some of these include:

* Talk to the mortgage company or bank and ask for time to get caught up before they start legal proceedings leading to foreclosure. This is known in the real estate sector as forbearance. Some institutions will help you work out a repayment plan.

* Talk to lenders and request a plan to spread out payments so as to catch up on missed payments. This type of arrangement usually calls for making a larger monthly payment.

* Refinancing is another possibility, but must be entered into carefully. This is done when there is equity in the home; the value of the home is greater than the balance on the outstanding loan.

* While not a very popular option, some lenders will forgive a month or two of missed payments. The earlier they are approached, the better the chances to implement this option.

If these options fail or are not available, one popular strategy in the real estate industry right now is a short sale. While this affects your credit rating, it will not have the same dire impact as foreclosure. With a short sale your home is sold for less than the outstanding loan. Experienced real estate agents will work to get the difference of the sale price and outstanding debt forgiven: retiring the debt. In other instances, however, the homeowner may still be required to come up with the difference.

It's important if facing foreclosure to get as much information as possible and to use only qualified persons to help you. For example, if the decision is to go the route of short sale, a certified real estate agent familiar with the process is an invaluable asset. If you plan on asking for time to repay, look for someone who is great at negotiating to help you.

preconditions of applying for mortgage

The first step in your preparation for obtaining a mortgage is to make a determination of the amount of money you can afford to pay each month. If you take a month to track what it takes to handle all your household expenses and find out how much is left, you will have some idea how much can be applied toward the mortgage payment. Use a notebook and record every expense you have each day and include descriptions and the total amount spent on each transaction. If you keep an accurate record, you will be able to see where your money goes and then you can decide whether it is a necessity or simply a wanted item. By doing this, you should be able to cut down on some expenses or possibly eliminate them completely.

If you are able to change your pattern of spending by eliminating unnecessary expenses, you will have extra money to put into savings to go toward a down payment on a home. This money should be put in a separate savings account so you can earmark it for the single goal of a down payment for your house. If you put as much of your disposable income after necessary expenses into this account, you could quickly reach your goal of a down payment amount. Lending experts agree that a minimum of 20% of the total cost of the home is what you should make an effort to save.

You can prepare for a mortgage loan by cutting back or completely stopping the use of your credit cards. The only exception to this should be when you know the amount of the balance can be paid off each month.

After you have saved a good amount for the down payment on a mortgage, you will need to get a copy of your credit report. This can be obtained free of charge through a major credit bureau once a year. With this report, you can find out if your current credit score will allow you to qualify for a home loan. The credit report will also enable you to estimate what the probable interest rate may be for your loan. A higher score will get a lower interest rate, and if your score is low the interest will in all probability be several points higher.

how and when to compare mortgages

The mortgage rate of interest is probably the main element to consider when you compare mortgages. This determines how much over and above the actual amount borrowed you will pay back. When it comes to the rate of interest you will have to pay for your mortgage then your credit rating goes a long way to determining this. If your credit rating is excellent then you will get the most attractive rates. However if yours is poor then you could still get a mortgage but the interest rates might be higher. The interest rates will also depend on the type of mortgage you are going for.

There are many mortgage types to consider such as the first time buyer mortgages, self certification mortgages, buy to let mortgages, capped mortgages, discount mortgages, fixed rate mortgages. A first time buyer mortgage is a relatively easy mortgage to secure as it takes into consideration the problems facing first time buyers.

If you want to get the best deal then it is essential that you get several quotes. One of the easiest ways to get quotes all in one place is to go with a specialist website and make a search with some of the top lenders. By doing so you can be sure that you have searched the whole of the marketplace and have got the best deal possible.

It is also best to ask colleagues, friends and family on their previous experiences with mortgage lenders and whether they would be able to recommend one. Start from this list, call and schedule consultations in order to be able to determine which ones will be able to meet your needs. Compare mortgage lenders based on the loan terms, interests, closure fees and payments, service charges and the like. Based on your expected monthly income, regular and planned future expenses in the coming months assess your financial capabilities and try to match this with what the mortgage lenders are offering. This way you will be able to manage your finances efficiently.

Using a mortgage calculator will show you what to expect. You can see how interest rates and your purchase price affect your monthly and yearly budget. This is a great way to set a realistic budget and compare mortgage quotes. Any time you receive a quote or information on a possible quote, use the mortgage calculator to see how it adds up.

Also, try to get help from a mortgage expert. A mortgage expert will be able to take a look at your credit file and help you compare mortgages that you can be approved for. If your financial picture is less than perfect, he or she can offer advice to help you clean up your credit and purchase a home in the future

how to get good mortgage with bd credit history

The first step to getting a mortgage with bad credit is understanding how credit scores actually work, and why they affect your ability to get a mortgage.



Your credit score is based on several different factors, the amount of available credit you have, how much of the available credit you have used, the length of your credit history, your employment history, and whether you pay bills and debt repayments on time. Your credit rating is a number between 300 and 850, with 850 being the best credit score you can achieve.



As far as lenders are concerned, anyone with a credit rating of 700 or more is a “good risk,” meaning someone who is likely to make mortgage repayments on time every month until the loan has been repaid. Below that level, lenders consider you are more of a risk in terms of whether or not you will continue to make payments on time. If your credit score is below around 620, you’ll find it difficult to get an affordable mortgage, and below 500, most lenders aren’t willing to offer loans at all.



Repairing Your Bad Credit



So what can you do if you have bad credit? First, know that if you have bad credit and you want to apply for a mortgage, it’s important to do whatever you can to repair your credit before you apply. A second important point is that it can take six months to a year to rebuild bad credit enough that it will positively affect your ability to get a mortgage. So it’s also vital that you’re willing to be patient, and take the time to repair your credit before applying.


Repairing bad credit has two main steps: first, check your credit report for errors, and second, repairing any damage done.

To check your credit score for errors, simply obtain a copy of your report from one of the three main credit-reporting agencies – Equifax, Experian and TransUnion. Examine the report thoroughly, and check for errors or out-of-date information. Even a single error can reduce your score by a significant margin, so this is a worthwhile step to take. To fix the error, call the creditor involved and explain why you think the item should be removed from your report. Make sure the creditor agrees to send you a letter verifying that the item was removed, to provide proof for the credit bureau.



Next, it’s time to start repairing your credit score. The most effective way to do this is simply to pay your bills on time, and keep your debt total low, while maintaining a small amount of available credit. Lenders like to see a fairly small amount of available credit, with a wide gap between the amount of credit you have, and the amount you actually use. Another point lenders look for is a long credit history, so if you have old credit card accounts that are in good standing, keep those open and active in preference to newer accounts.

Equity release benefits

In Britain equity release is the term used to refer the process of reverse mortgage. This is useful for senior citizens as equity release allow them to stay in their home till death. In case someone goes into a nursing home permanently. Through equity release, the homeowner can cash the accumulated equity of the property and use the fund for any other purpose.elderly people can be benefited by the equity release or remortgage process. They get a lump sum amount in hand; this fund can be invested into annuity insurance or any other retirement plan. This way they can get a steady income as well. And most importantly, they can still live in the same house – no need to sell off and move to a new house in a new locality.
The benefits are as follows,
1:It opens up another source of income for you, and that is when you are not in a position to work. Moreover, the amount you get by releasing the equity of your home is tax free. How much money you can get from equity release depends on the value of the property, the amount of mortgage if any, and the present market scenario. You can appoint an evaluator or look for equity release calculator to know how much you can get by releasing the equity of your home.
2:If you need urgent cash and you take a loan, chances are you have to pay a huge installment every month to repay the loan. With equity release you can get a lump sum amount in hand without having to pay any monthly installment. It relieves you from a lot of worries and tension.

Good mortgage finding tips

Finding the right mortgage loan can be very hard and frustrating. Especially, if it is your first time of taking a loan. Buying a house and taking a mortgage loan on the house is a big step for you since it involves a lot of risk. You probably don't know what to do or where to go.

The very first step you need to take is to shop around for lending companies offering mortgage loans. You can do research in the internet or personally talk to people who are experts in the field. Check out not only three but more than six lending companies and get estimates or quotes from each company to be able to compare.
Never allow a company to encourage you to commit fraud by claiming that the loan is intended for business use when in fact it is for personal, family or household use. A loan that is based in wrong information will never get far nor prosper.
wary of prepayment penalties. Prepayment penalties are incurred when you make advance payments for your loans. The company will obligate you to pay the lending company six months worth of interest that you just paid in advance. So in the long run you still had to pay the interest even if you have made advance payment of the loan.