Mortgage financing is an integral part of the home ownership experience, as most home buyers require financing in order to purchase their home. There are a wide variety of financing options that are available to prospective home buyers. Our home financing resources can help you to navigate the financing options that may be available for you.
Whatever your level of home buying experience, we have the tools and information you need to start the process with confidence.
A mortgage is a loan that is secured by real estate. Because real estate tends to sustain it’s value, lenders are willing to lend significant amounts of money for the purchase of a home - - often times requiring the borrower to contribute only a small percentage of the total cost of the property. In the event that the borrower is unable to repay the loan, the lender would have the ability to take over the ownership of that property.
Qualifying for a Mortgage
When lenders consider a loan application, they will typically evaluate the loan based on four standards, which are often called the 4C’s and include:
- Income (Capacity) - Do you have sufficient income to make the monthly payments? You will need to provide documentation that verifies your income.
- Credit History (Character) - Do you have a personal history of re-paying your debts? In today’s lending environment, your credit record can greatly impact the types of loans in which you will qualify.
- Savings (Capital) - Have you saved money that can be used toward the down payment and closing costs for the purchase of your home? Typically, a lender will want to verify that you have enough savings to cover your down payment and also have a financial reserve that would cover several months of mortgage payments in the event that you lost some or all of your income.
- Property (Collateral) - What is the value of the property that you are buying? Lenders will require an appraisal on your property to verify its market value.
The Home Financing Process
The primary steps of the financing Process are as follows:
- Getting Pre-Approved
- Identifying Loan Options
- Choosing the right lender
- Completing the Loan Application
- Loan Approval
- Closing and Loan Funding
The Five Myths that Create Barriers to Homeownership
Buying a home can be an important step in building a secure financial future. Unfortutely there are some common myths and misconceptions about the financing process, and there are many people who falsely believe that homeownership is out of their reach. Don't let these myths keep you from the personal and financial rewards of homeownership.
Myth #1: "I don't have enough money for a down payment.
In the past, buying a home required a 20% down payment. But not today. In fact, 7 out of 10 first-time homebuyers make a down payment of 10% or less. We have loan programs that can help you buy a home without a lot of cash, or any at all.
Myth #2: "I have less-than-perfect credit, so I can't get a mortgage."
A less-than-perfect credit history doesn't have to stand in your way of reaching your homeownership goals. We have helped thousands of individuals move beyond credit challenges into homes of their own.
Myth #3: "It's less expensive to rent, and now may not be the right time to buy."
In fact, you may be surprised how much home you can buy for the same rent check you're sending innow, especially when you consider the tax advantages of homeownership*. And unlike rental costs, your monthly principal and interest payments will stay the same for the life of a fixed-rate mortgage. Because home prices historically increase (and only occasionally decline), buying as soon as you're able can be a more effective strategy than trying to time the real estate market. Moreover, as a homeowner, you'll be building wealth as your home equity grows.
Myth #4: The whole mortgage process is too long and complicated."
We want to make buying your first home as easy as possible. We will help you through each step of the financing process.
Myth #5: "I won't be able to fit a mortgage in my budget."
Our goal is to help you succeed financially, so we'll carefully review your loan options with you and help you choose the loan that's right for you. With a loan that fits your budget and your financial goals, your home will be a powerful tool in building a secure future for you and your family.
Our helpful guides for step-by-step information on buying your first home, buying a vacation home, making a down payment, and many other homeownership topics. Get a Free Homeownership Guide Today - Contact a Prudential California Realty office near you for more information.