'Top Ten Tips' Buyers Need to Know

To help the first-time home buyer, the California Housing Finance Agency — known as CalHFA — has developed a list of "Top Ten Tips" prospective home buyers need to know before buying a home

1. Before starting to look for a home, get pre-qualified for a loan. Lenders will take an application, process the loan documents, and see the loan through to the funding stage.

2. Marginal or Bad credit — consult your lender. Buyers may still be able to qualify for a loan depending on how long ago and why the buyer’s credit was affected.

3. Buyers may need a down payment. CalHFA loans are all 100% financed Requirements do vary depending on the type of loan; however CalHFA offers many down-payment assistance programs which could include loans or grants depending on the down payment required. Talk with a lender about programs available.

4. Funds for closing costs. Closing costs are fees charged for services related to the closing of a real estate transaction. These fees could include, but are not limited to: escrow fees, title policy insurance fees charged by the title insurance company, mortgage insurance, fire, flood and homeowners insurance, county recorder fees, loan origination fees. Speak with a lender for an estimate of these costs.

5. Some loans have points and some do not. Points are fees charged by a lender equivalent to 1 percent of the loan amount. Some lenders may charge points in exchange for a lower interest rate. A CalHFA loan does not have points and limits the fees a lender can charge you.

6. Mortgage rates can be fixed or adjustable. This choice can be made based on whether mortgage rates are high or low, and how long the buyer plans on living in the home.

7. There are two main types of loan categories: Conventional mortgage loans are available with fixed or adjustable rate loans; Government loans include Federal Housing Administration, fixed- and adjustable-rate mortgage loans and Veterans Administration fixed-rate mortgage loans.

8. Low and moderate income home buyer. There are special programs designed to help. These loans are available through private lenders, as well as local and state housing agencies.

9. Mortgage insurance. Mortgage insurance protects the lender from loss if the buyer should default on the payment. Conventional loans usually require larger down payments and do not require this insurance. Mortgage insurance is required on FHA mortgage loans.

10. First-time home buyer counseling. There are multiple organizations that provide classes for the first-time home buyer. These classes will cover home selection, Realtor services, lenders, loan programs, home ownership responsibility, saving for a down payment and other important information.