California Real Estate - The 7 things you must know before you buy

This is a helpful list of things to consider.  Before putting all your money into mortgage payments, please
consider the following 7 important issues. By considering these important financial issues, you will be able to make your payments work much harder for you.

1. Get pre-approved BEFORE you look for your new home.

Of all the steps to do before you buy a home, the pre-approval part is the easiest.  One of it's benefits: It will give you complete peace-of-mind while you are looking for a home. The best part, it's usually free. Your California mortgage lender can give you a written pre-approval with no obligation on your part. Getting pre-approved means money in the bank!  Being pre-approved means that you have a guarantee of obtaining a California home loan up to a specified level.

2. Know what level of monthly payment are you comfortable with.

When your are discussing your pre-approved mortgage with your California mortgage lender, you will find out up to which level you can borrow.  You must also pre-assess what amount of dollars you want to spend each month on your home without getting uncomfortable.  Your financial situation could give you a higher level of pre-approval than what you could feel comfortable paying each month. Once you have set that amount, you will know the price range of the house that you should be looking for.

3. Select the type of California mortgage that will best suit you.

Before you commit to a certain type of California mortgage, there are a number of questions you should be asking yourself.  Mainly: How long do you think you will own your present house?  Are the interest rates going down or up?  Will your earnings change in the near future, will that change have any influence on your future payments?  Once you know the answer to these questions, you should be in a better position in choosing the appropriate type of California home loan you should be looking for.

4. Payment frequency options.

Accelerated weekly and bi-weekly periodic payments can save you thousands of dollars in interest payments. If you plan your mortgage periodic payments well, you will significantly lessen the amount of interest that you will be charged over the term of the loan.  The best trick is the accelerated bi-weekly mortgage payment system.  You pay every second week, half the amount of what should have been your monthly mortgage payments.  By using this system, at the end of the year you will have paid the equivalent of 13 monthly payments.

Note: Not all mortgages are of the accelerated bi-weekly

5. Authorized pre-payment.

Another system that can greatly reduce the total interest amount you will have to pay is the authorized pre-payment system.  By paying off a certain percentage of your mortgage, or by increasing the amount that you pay monthly, will greatly reduce your mortgage costs.  By using an authorized pre-payment system you can have a major impact on the number of years you will have to pay your mortgage.

Note: Not every mortgage has the prepayment option built in.

6. Work with a financial expert.

Before you choose your mortgage type, or the California mortgage lender, get the insight of a professional.  Ask a California mortgage specialist.  A California mortgage specialist will usually answer your questions at no cost or obligation and, if you do use his or her services, you will probably get your California mortgage loan faster, and with better conditions than if you didn't.

7. It's usually better to choose a good house instead of a good deal.

Here is an example.  In 2004, two houses were sold.  One for $320,000 and the other for $610,000. One was at a major road and the other one, not far from it, in a reasonably quiet street.  Both houses were purchased by respective owners around 1982.  The one at a major road was paid around $70,000 while the other was paid around $90,000.  The owner of the later home not only got higher appreciation from his house, he also enjoyed a quieter life for 22 years.

Good Luck!