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What you need to purchase a home

If you’re planning on purchasing one of the many homes for sale in Monterey County, CA, it helps to learn as much as you can about the process and the area itself. One thing you should know is that many California homebuyers purchase homes here by paying cash. However, there is also a growing number of people who want to pay for their homes via mortgage. If you are going the path of homeownership via mortgage, then you will want to read on.

Questions to ask

First, ask yourself these questions:

  • What is my debt-to-income ratio? This is one factor that matters among most mortgage firms – how your regular income fares against your recurring debts. These lenders will see if you can still take on the burden of another financial requirement (i.e., monthly mortgage payments) on top of your other debts and still maintain a sizeable take-home pay. If this figure goes below 43%, then you’ll be in good standing with lenders.

  • Is my credit score good? The answer to this question will most likely determine your eligibility for a home loan. You need to have a score of 600 or higher so that lenders will accept your loan application. 

  • Do I have enough for a down payment? When making a home purchase, a down payment is usually required. This figure could constitute 3% to 20% of the home’s price tag. This will depend on the kind of financing you qualify for. VA home loans allow members of the military to waive down payment and enjoy lower interest rates. Meanwhile, the FHA loan relaxes the down payment rate to 2.85%. Most first-time homebuyers in the state take advantage of FHA loans.

Then here’s a question to give your real estate agent: Can you help me with the home appraisal? A home appraisal is a key component to the home buying process as this proves to the lending institution that the home you’re eyeing is worth the price tag attached to it. Monterey County Realtors with years of experience in the business will have a network of reliable people in the industry that they can recommend. Among these are home appraisers. 

Documents to prepare

One rule of thumb before putting together all the required documents for your home purchase: Pay fees only to a lender that you already chose. You have no financial obligations yet while still in the lender shopping stage.

Another thing to remember: Even while still looking for a lending institution to help fund your home purchase, it is best to get most, if not all, your paperwork ready. That way, you spend less time paper-pushing and more time for things like preparing for the eventual move.

Here are the needed documents:

  • Most recent payslips – preferably photocopies of your last two issued payslips.

  • W2s – yours and that of your employer.

  • Federal tax returns – useful in the event that you didn’t file your taxes in the previous year.

  • Bank statements – three months’ worth from each bank from where you have an active account.

  • Asset statements – photocopied versions of statements of your stocks/bonds/mutual funds/other financial tools.

  • Copy of latest driver’s license

The best Monterey County Realtor to choose

Finding your own piece of Monterey County real estate is easier when you have an established real estate team by your side. Compassionate yet dedicated, Coastal CA Homes has your back as you proceed with your home buying journey. Call us at 831.455.5032 today or click here.