Making the jump from renting to owning your space can be a major transition. It’s normal to feel excited, stressed and confused by the process of getting a mortgage, finding a property and purchasing a home.
Start with our guide on how to buy a house in California for a seamless transition.
Step 1: Consider Current California Mortgage Rates
Mortgage rates in California can change from 1 day to the next depending on your local housing market conditions, the overall economy at large and the state of the bond market. It’s a good idea to keep tabs on interest rates and how they’re changing over time so you don’t end up locking into a rate that’s too high.
Below, you’ll see a chart with today’s average mortgage rates in California. We update this information regularly to ensure that you’re seeing the most accurate information possible.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.458% | 6.536% |
| 15-year fixed | 5.591% | 5.716% |
| 7/1 ARM (adjustable rate) | 6.213% | 7.245% |
| 5/1 ARM (adjustable rate) | 6.345% | 7.554% |
Step 2: Pick a Mortgage Lender in California
As a California resident, you’ll have a massive selection of lenders and loan types when buying your first home. The best mortgage lender for you will vary depending on the loan you need, the amount of money you want to borrow, your credit score and many other factors. Consider starting with a few of our favorite lenders below.
- Online Service
1. Best Overall: Quicken Loans®
Quicken Loans is a highly regarded mortgage lender for first-time buyers.
The lender combines an exceptionally simple application process with nationwide availability and a variety of loan types.
The YOURgage® platform allows you to choose a term between 8 and 30 years. The company also offers every type of government loan as well as conventional and jumbo options.
Not sure which type of loan you need? Visit Quicken Loans’ Rocket Mortgage® platform. Rocket Mortgage® features an endless number of calculators and articles to help you learn about all of your options.
2. Best for Veterans: Veterans United
If you’ve served in the armed forces, you might want to consider a loan through Veterans United. Veterans United specializes in VA loans, a special type of loan for veterans and active duty service members.
With a VA loan, you can purchase a home with 0% down — something that’s not possible with an FHA or conventional loan.
Veterans United employs a full team of former service members from each branch of the military. This means that you’ll get personalized assistance based on your service which can make it easier to get your proof of service in order.
If you don’t qualify for a VA loan, Veterans United can also assist you in a conventional loan.
- Self-employed Borrowers
3. Best for Self-Employed Buyers: Luxury Mortgage
If you’re self-employed, you might have more trouble finding a mortgage loan even if you have fantastic credit and your income exceeds requirements. Your lender needs to know that you’ll be able to continue to make your mortgage payments after you take out your loan.
If you don’t have W-2s to prove your income, you’re often seen as a riskier candidate for mortgage lenders.
Luxury Mortgage is an excellent choice for business owners and independent contractors. Asset Qualifier loans from Luxury Mortgage allow you to use nontraditional business assets when applying for a loan, and there are no income documents required to apply.
You can finance up to 80% of your loan’s value and borrow up to $6 million with Luxury Mortgage.
Step 3: Find a House
After you receive a preapproval for a home loan, you can start shopping for properties. Your preapproval letter should give you an estimate of the amount of money you can borrow in a home loan. Most buyers use this as a starting point when setting their budget. If you like, you may want to work with a real estate agent or realtor to narrow down your home search.
When you start exploring online real estate databases, you might find yourself overwhelmed with options. It can be helpful to create a list of wants and needs before you start shopping. Some of the things you might want to consider when you compare properties include:
- Neighborhoods and school districts
- The square footage and number of bedrooms and bathrooms
- Property tax rates and estimates
- Property condition and how much work you’re willing or able to do after the sale closes
- Major appliances included with the sale
- Commute or access to public transportation
- Other amenities like a pool, privacy fencing and more
Don’t be afraid to explore properties that don’t exactly fill every “want” on your list. Most of the time, you’ll need to make a few sacrifices in order to stay within your budget.
Step 4: Make an Offer
Once you find a home you love, you’ll submit an offer letter to the seller or the seller’s agent. Most real estate agents will create the offer letter on your behalf, but you can write it yourself. If you do choose to write your own offer letter, be sure to include all of the following information:
- The address of the home you want to buy
- Your full legal name and the full legal name of anyone who will be on the title
- The total amount of money you’re offering for the home
- Any concessions required for the sale
- Any fixtures you want included in the sale
- Your preapproval letter
- The date you expect to close on your loan
- The date you want to move into the property
- A deadline for response
Once you submit your offer letter, the ball is in the seller’s court. Your seller can accept your offer or reject it. They may also make a counteroffer. If this happens, be sure to carefully read the new terms to see if it’s something you’re open to. You might need to field multiple counteroffers before you reach an agreement with the seller.
Step 5: Closing Time
Once your seller accepts your offer, it’s time to close on your loan. The entire closing process usually takes about 30 days and includes 3 parts:
- Appraisal: Your mortgage lender will schedule an appraisal for your home. During an appraisal, an appraiser will visit your home and do a bit of research on your neighborhood to assign an official value to the property. Mortgage lenders require appraisals before you close on your loan to ensure that they don’t loan out more money than the home is worth.
- Inspection: During an inspection, an expert will visit your property and test your home’s systems and appliances. At the end of the inspection, you’ll receive a summary of what in your home is damaged and the overall condition of the home you’re buying. Most mortgage lenders won’t require you to get an inspection before you buy a home. However, you should still get one to make sure that your home doesn’t have hidden problems that the seller doesn’t know about.
- Underwriting: During underwriting, your lender will finalize your loan paperwork and double-check your financial documentation. This usually happens entirely behind the scenes but be sure to respond to your lender quickly if you do receive a request.
After all 3 steps are finished, your lender will schedule a closing meeting. During the closing meeting, you’ll sign on your loan paperwork, pay your closing costs and down payment and receive the keys to your new property.
Find Your Home in California
After you move into your new home, you’ll need to take steps to manage your mortgage loan. Understand your monthly payment before you sign on your loan, and research property taxes and insurance costs for your area before you apply for a preapproval. This will help you understand what to expect and reduce your chance of repayment issues or foreclosure.
About Sarah Horvath
Sarah Horvath is a distinguished financial writer renowned for her expertise in mortgage content. With years of experience in the mortgage industry, Sarah offers invaluable insights into home financing, refinancing, and real estate trends. Her comprehensive understanding of mortgage products, coupled with her ability to simplify complex financial concepts, makes her a trusted resource for homebuyers and homeowners alike. Sarah’s dedication to providing accurate and actionable information empowers readers to navigate the mortgage process with confidence. Whether discussing mortgage rates, loan types, or tips for homeownership, Sarah’s writing is characterized by clarity, reliability, and a commitment to helping individuals achieve their homeownership goals.