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California Mortgage Information - Things You Should Know

Aug 17, 2007
Obtaining quality and informative California mortgage information is paramount to securing a mortgage with the best interest rate. California is one of the most expensive and preferred real estate options in America.

You see, investors and homeowners realize that real estate is a sound and very stable investment, and they realize that California has diverse properties for people with different income levels and interests.

However, Californian homes aren't cheap. In fact, the costs for average homes in California are significantly higher than the norm in the United States.

On a plus side, Californian homes tend to significantly increase in value. Therefore, Californian real estate is a "hot market". So, whether you're buying a condominium, single family residences, or apartment complex for yourself or as an investment option, there are many factors that you should consider.

The most important is to obtain quality and informative California mortgage information from various sources which will enable you to make an informed decision based on facts not fiction.

California Mortgage Information - Myths about Home Mortgages
When seeking quality California mortgage information, please keep in mind that there is a lot of information floating around about California mortgages, some true and some pure myths.

For example, one often hears that 20% of the purchase price of the property is required in cash or that a few late payments disqualify you from applying.

Well, the good news is that this is not necessarily true. There are certain programs that will assist first-time buyers with as little as 0% - 5% down payment and other programs for investors. You simply have to know how to obtain them.

By obtaining quality California mortgage information now, you'll learn that there are two basic formulas, known as mortgage qualifying ratios which will help you determine how much mortgage you can comfortably afford.

In fact, these guidelines will help you determine the amount of money you should spend on mortgage payments (after evaluating your income and other expenses).

To qualify for conventional housing loans in California, your housing expenses should not exceed 26% to 28% of your gross monthly income. For Federal Housing Administration (FHA) loans, it should not exceed 29%. Your monthly housing expenses include the mortgage principal, interest, taxes and insurance (PITI).

In addition, by obtaining quality California mortgage information now; you'll also learn that other expenses that extend beyond eleven months, such as car loans or college loans, are known as long term debts.

Your total monthly expenses, including PITI and long term debts should not exceed 33% to 36% of your gross monthly income in case of conventional loans.

California Mortgage Information - Rate of Interest
You'll also learn that your rate of interest on your mortgage would fall under one of the following categories:

Fixed Interest Rate: Throughout the term of the loan period, you will pay a fixed amount to service your loan. Down payments could be as low as 5% and your monthly interest payments remain the same.

Adjustable Interest Rate: Depending on the prevalent market rates, your rate of interest fluctuates. You start at a lower rate of interest and depending on your negotiation, could be paying an increase of 2% every year, with a cap of, say, 6% over the life time of your loan.

Balloon Mortgage: This may be the best option if you intend to move in five to seven years and would like to pay a lower interest rate. This option is also more viable if are not ready to accept the adjustable rates of interest. Here, you would pay an interest rate lower than the traditional 30 year loan, but your loan would be called in five to seven years.

In case you decide not to move out, you will need to pay off the previous mortgage with cash or obtain another loan.
In conclusion, obtaining quality California Mortgage Information isn't easy but is worth the effort. By doing so right now, you'll learn a ton of great information that will enable you to save yourself time and money. And, in no time flat you'll be well on your way to obtaining your dream California property with an attractive mortgage that meets your unique needs.
About the Author
Jonathan Sapling writes extensively on California mortgage and related Home Equity subjects.
To read more about California Mortgage go to: California Mortgage Expert Site
Or visit his blog about: Home Equity News
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