Article Treasure Cove

The idea of buying a home for the first time home buyer in California can create an incredible euphoria, something you only feel a few times in your life, yet it’s counterbalanced with a lot of stress. Having the ability to put down a deposit major enough to secure a mortgage remains the largest up hill struggle for most California first time buyers. The truth is that the bigger your available deposit, the wider your selection of mortgage products will be.

Historically the average California first time buyer would have needed to be ready to put down a ten percent deposit – in some areas of the state, this can mean well over $30,000 for an average house price! Understandably, finding that kind of money is going to be difficult for most would be borrowers and not long ago banks have recognized this problem and have looked to look for alternative measures – it is now possible depending on your credit record, to secure a one hundred percent loan to the value of the property. Go here to get more information if you are a California first time buyer

It is a good idea however to provide some kind of deposit as there’s a danger of being in negative equity should home values fall sharply. Without a deposit, the bank will also view you as a higher lending risk which could result in your mortgage interest rate being less competitive. As captivating as it could be, taking out a loan somewhere else to pay for a deposit should be evaded.

Mortgage Fees

There are lots of different costs to account for when purchasing a property. Commonly overlooked by first time buyers in California, closing costs and origination fees can swallow the money you planned to give as a down payment. It is common to overlook these costs when scraping around for a deposit to put down.

Some banks will even charge you a fee known as a higher lending charge – this charge is mostly applied where a borrower is looking to borrow over 75% loan to worth. The higher lending charge is applied to guard the bank in the event of mortgage shortfall however, the pricetag is covered by the borrower.

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