How to finance a home purchase is what I will be going over in this week’s article.

In these articles, I said I would go over a few questions you may want to think about if you are thinking of selling your property. Here are the questions I listed, and I said I would go over each of them in my articles.

What is the condition of the property? 2. How long will it be on the market? 3. What improvements should be made to the property? 4. What are the estimated closing costs? 5. What is title insurance? 6. Are there any liens or assessments that need to be paid off before closing? 7. Are there any special financing options available for a buyer to buy the property? 8. What type of inspection should be conducted? 9. Should you be offering any incentives in order to close the sale? 10. What types of repairs need to be completed prior to closing?

In my last couple or article, I when over the question of what improvements should be made and question of what repairs you should make to get your property real to sell.

This week, I am going to go over the question of financing.

There are a number of ways a buyer can buy a property, from paying cash to government back loans.

If a buyer wants to pay cash, then there is no lender involved.

But most buyer will not being paying cash and will need to finance the purchase.

Yes, there are several special financing options available for buyers who want to purchase a house in California.

Some of these include FHA loans, VA loans, Rural Housing Loans, CalHFA loans, CalVet Home Loans, and down-payment assistance programs, which I when over in my last article on what repairs need to be made to the property for the buyer can get these type of financing.

These programs have lower limits and for most of your higher price property in Southern California, selling prices may be higher than the loan limits for these type of programs for buyers.

Most buyers for buying a house will be using conforming financing that have higher limits, and these limits vary by city.

At the present time the Federal Housing Finance Agency (FHFA) has set the 2023 California Conforming loan limit at $726,200 and up to a $1,089,300 loan limit in “high-cost” counties like Orange County, Los Angeles County, Santa Clara County, and San Mateo County.

Loans over these limits maybe labeled “Jumbo” to be placed in the conforming loan category. Conforming loans in California generally come with better mortgage rates and easier underwriting requirements.

What is a conforming loan? A conforming loan is a home loan that “conforms” to the loan limits established by the Federal Housing Finance Agency and the underwriting guidelines of Fannie Mae and Freddie Mac.

A buyer can put as little as 5% down with most conforming loan, but will pay for PMI (private mortgage insurance) and depending on the terms of the loan, the PMI will be removed after the equity in the property is over 20%.

How To Finance A Home Purchase

Then there is selling financing, where the seller finances the loan.

You may question why would a seller finance the sale of their property.

One reason is maybe to avoid a large part of sale price going to pay capital gains up front, and there may be other tax reasons for financing a buyer.

As a seller, you may want to carry back a part of the loan to help the buyer to qualify for the loan.

Let’s say that the buyer only put down 5% down, that buyer has to qualify for the amount of the loan plus the PMI they will be paying.

If you were to carry back 15% of the loan at a lower payment per month, the buyer would have to qualify for a lower loan.

Yes, there are a number of ways a buyer can finance a loan and a number of ways a buyer can get a loan to buy a house

This is just a general overview and very basic loan information at what a buyer and seller can do to buy or sale a  property.

Call or text (909)226-3551, for an appointment or to ask a real estate questionSteve Olmos
Selling real estate in Southern California since 1980

Steve Olmos: www.lookingrealestate.com/contact information
Homequest Real Estate

Diana Olmos: www.mortgagemarketingmentor.com
Statewide Funding Inc.