How to Get a Mortgage in California

Getting a home mortgage in California doesn't have to be an arduous process. We can help with educating you on the process, but we can't help with the high California real estate prices. Following the steps below can save you time and a little money when you're ready to get a California home mortgage loan.

Difficulty: Moderately Easy

Instructions

1. Get a copy of your credit report. Finding your credit score and correcting any errors is a simple way of getting the best interest rate.

2. Know that California is a community property state, which means both spouses own half of the property regardless of who is paying for it.

3. Search for a mortgage broker (individuals and agencies that arrange financing from a variety of lenders) or a lending institution such as bank, credit union, or online mortgage company. This step is key to getting the type of mortgage that will fit your needs best.

4. Mortgage brokers are required to be licensed in California. Ask for proof of their license. They must pass a written exam and have certain education requirements to be licensed.

5. Steer away from Adjustable Rate Mortgages. These move some of the interest rate risk away from the lender and onto you. Basically, if interest rates rise, so will your mortgage payment. If interest rates fall, your payment will stay the same or decrease slightly. If there is a huge spike in interest rates, you could lose thousands.

6. There are no predatory mortgage lending (intentionally coercing consumers into contractual loans with unusually high payment terms and interest rates, often directed at uninformed borrowers or those with poor credit) laws in California. However, the Home Ownership and Equity Protection Act of 1994 federal law applies to this and all of the United States.

7. Explore various California and federal home buyers programs offered to the disabled, senior citizens, veterans, low-income buyers, single parents, first-time buyers, senior citizens, and rural home buyers, such as the Interest Only Plus program, the 40-Year Fixed program, and the Affordable Housing Partnership Program.

8. Fill out the loan application with your selected lender, and bring all paperwork such as pay stubs, investment information, and tax returns. Pay careful attention to any fees that are mentioned

9. Acquire a reputable real estate agent to help you find your dream home.

10. Finalize the loan with your lender, and make an offer on the home.

11. Pay all closing fees. Move in, and expect to begin paying your lender shortly.

Tips & Warnings

• Be patient and find the lowest interest rates. Just one quarter of a percent can mean thousands of savings over a 30-year mortgage.
• If the mortgage broker or lender claim that there will be no charges, get that in writing.
• Have your prospective home professionally inspected. Discover problems that may exist before the deal is finalized.
• Do not let a real estate agent pressure you to buy a specific home, as they may have another agenda.
• Before you sign anything, make sure that you thoroughly understand all the terms of the mortgage contract.
• Never pay a lender to apply for a loan
• Record low interest rates of the recent past have led to an explosion of unethical lending and loan scams. You may wish to have an attorney review any documents before you sign them.
• Make sure that the title of the home has no liens before you purchase it.
• Have an attorney inspect documents before you sign them. It's an additional cost but it may save you from the perils of unethical lenders.