5 Best Tips for Getting a California Home Loan in Newport Beach
California is a great place to live, and Newport Beach is the state's jewel: perfect temperatures, miles of gorgeous coastline, great shopping, and fine dining. All you need is your California home loan and you're ready to get into your Newport Beach dream home.
5 Tips for Getting a California Home Loan
Nail Down Your Credit Status
Your first step to getting a home loan should always be to check your credit score, which you can do for by ordering a credit report from one of the three credit bureaus: Experian, TransUnion, and Equifax. You want to know your actual score, of course, but you also want to see what's on the report.
If you see any errors, your first step should be to dispute them. As soon as you file a dispute claim with one of the credit bureaus, they will resolve it within 30 days and get your score where it should be.
Bringing Your Score Up
If your score is just a bit low, there are some things you can do to bring it up before applying for a California home loan. If you're able to pay down any credit card balances, you'll be using less of your available credit and will improve your overall score.
Another tip for getting your score up is to make sure you're paying everything on time. Late payments can hurt your score, so setting up auto-pay will help you make sure you never fall behind. Finally, be sure not to open any new lines of credit during this time.
Build Up Your Savings
It's harder to get a loan if you're living from paycheck to paycheck. Financial institutions prefer to loan to people who have a solid backup of funds they can draw on in an emergency, and you'll also want to put down as large a down payment as possible.
A conventional mortgage requires a down payment of 5% to 20% of the cost of the property, while an FHA loan requires a minimum of 3.5%. There are a few options where you need no down payment, but these are primarily for VA or USDA loans and not everyone is eligible. In general, the more you can afford as a down payment, the better your loans terms will be.
Go Over Your Budget: More Than Once
Part of getting a loan is deciding exactly how much you can realistically afford in mortgage payments. Make sure you consider your debt to income ratio to see where you stand. This is the amount of your income that goes to paying down debt each month. Anything more than about 43% will make it hard to get a loan.
Another benefit to going over your budget with a fine-tooth comb is you can see where you might be able to cut back, save more, or pay debt more quickly so your debt to income ratio improves.
Decide the Loan Terms That Work for You
First you have to decide between a fixed-rate or an adjustable-rate mortgage. With a fixed-rate, you'll have the same interest rate throughout the life of your loan. The advantage here is that you always know exactly what your payments will always be. The most popular types of fixed-rate loans are 15-year and 30-year loans.
An adjustable-rate mortgage starts out with a low-interest rate and eventually adjusts according to market rates. The benefit here is that you often get much lower interest rates, especially at the beginning. The downside is that, if the market changes, you could be stuck with a much higher rate later. For this type of loan, you typically want a short term.
Get the Right Loan
There are a lot of things to consider when getting a home loan, but the process doesn't have to be overwhelming or confusing. Call Justin Purpero today to find out how quickly we can get you into your dream home.