Mortgage Help For California First Time Homebuyers

Allison Beatty
LoanBiz Columnist


First time homebuyers in California face two key challenges – finding a home they can afford and getting the mortgage they need. Home ownership is an important goal. If homebuyers do a little research, however, they'll find there are many loan programs geared toward first time homebuyers.

Common Mortgage Issues

Many first time homebuyers are struggling just to get into a home, particularly in many of California's pricey real estate markets. Many also:

• Have limited funds for a downpayment
• Lack adequate funds for mortgage closing costs.
• May have insufficient or bad credit.
• Have inconsistent employment histories.

First Time Homebuyer Assistance

Many mortgage lenders and the federal government have loan programs aimed at overcoming common obstacles. There are many traditional mortgages that allow you to finance 97 percent of a home's value, for example. This means that instead of struggling to come up with a 10 to 20 percent downpayment, you only need three percent. There also are FHA loans that carry lower downpayment options.

Mortgage Terms

These types of first time homebuyer loans are ideal for cash-strapped buyers, but one should review the details carefully. Some loans may carry a higher interest rate, for example. You may decide the loan still makes sense, as it helps you achieve an important goal of owning a home in the California market. You also will have to pay private mortgage insurance – or PMI if you have a down payment that is less than 20 percent. PMI, which can add $75 to $100 per month to your payments, is insurance that covers the mortgage lender in case you default on the loan.

Getting A Mortgage in California

There are many ways to realize your dream of owning a home in California. The first step is to do a little research into the various FHA and other loans geared toward first time homebuyers. Then figure out how much you can afford, so you'll be shopping in the right price range.

Source
Buying Tips

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing home improvement columns for 15 years.