Home Loan Steps For Purchasing Southern CA Properties

There are several major distinct steps in the home purchase process, and many relate to obtaining a mortgage loan. It may be complicated for both first time and repeat home buyers. This blog details important details on home loan steps for purchasing Southern CA properties and includes what you should know prior to beginning the process.

Home Loan Steps For Purchasing Southern CA Properties

The Pre-approval

A pre-approval is an introductory analysis of your finances and credit rating to determine what you may be able to receive as a loan. It verifies that you meet the primary criteria for financing. Pre-approvals do not certify that you will ultimately be approved for financing, but is a natural first step in the loan process.

Mortgage Application

A formal application is submitted typically after you have an agreement to purchase a property. You may be required to furnish additional financial paperwork and information. The details on the property are also submitted to the mortgage company for review. They will require a copy of the Purchase agreement in order to proceed. Your contract will typically specify that you complete an application before a specific deadline.

Performance of an Appraisal

An appraisal is needed by the mortgage company (although buyers are typically carry the burden for the expense) to pinpoint the current market value of the real estate. Appraisers will evaluate recent home sales and compare them to the one that you are buying. A specific dollar value is provided. Ultimately, the property value must justify the amount that the mortgage company is loaning to you.

Commitment Letter

After your financial information and the property details are analyzed, the lender issues a letter of commitment. This confirms that no major issues exist and that the lender is fairly certain that the mortgage will obtain approval. There can be a few conditions noted in the commitment such as an employment verification and final credit check. Thus, it is important not to make major purchases or alter your financial situation even after a letter is issued as it may keep the mortgage from closing.

Clearance to Close

A clear to close is basically the ending approval of a mortgage. It affirms that all requirements have been completed and that the lender can release the file to the closing agent. This can occur just days before the anticipated settlement date.

Closing the Loan

The closing involves signing of forms and filing of paperwork into public record. Be sure to have official identification and certified funds for any monies due. Personal checks or cash are ordinarily not acceptable.

Final Words of Wisdom

Deadlines are a critical factor of any real estate transfer, so make sure that you know the dates and what you must perform to satisfy each one. Getting representation from a experienced mortgage professional and real estate agent will be very important. They can provide you with guidance and assistance, stay on top of deadlines, and make it a more positive experience. As a local real estate professional, I will offer help with the mortgage and overall home purchase process. You may reach me, Matthew Rapoport, at Homes Inc. via phone at (213) 334-4141 or email at [email protected]

Southern CA Home Renovations With The Best Return

Southern CA homeowners should calculate the actual change in the value of their real estate versus the expense of particular changes before performing any updates. Some upgrades are more profitable than others. The following are statistics on Southern CA home renovations with the best return.

Southern CA Home Renovations With The Best Return

Home owners typically anticipate to redeem the full amount of money spent on repairs upon the sale of their property. This is a common feeling, but unfortunately it is not what actually occurs. Different property repairs provide different returns, and that value may differ depending on geographic areas. To give you a general understanding on home renovations with the best return, below are some nationwide trends.


These figures are from the Remodeling Magazine Report.

Renovation Amount Spent Value Change Cost Recovered
Basement Room Addition $63,378 $42,338 66.8 %
Garage Door Update $1,512 $1,087 71.9 %
Bathroom Addition $40,096 $20,455 51 %
Family Room Addition $83,118 $50,004 60.2 %
Master Suite Addition $106,196 $62,874 59.2 %

Assessing Home Renovations With The Best Return

Another factor affecting the value of projects is the quality and scale. Kitchen updates, for instance, can be completed using different quality products resulting in a different ending figure. So, not only should you think about the type of repair but also the brands and quality of materials. For a detailed list of property updates and up to dateSouthern CA home renovations with the best return, visit http://www.remodeling.hw.net/cost-vs-value/2016/.

Southern CA Home Loan APR Versus Interest Rate

When looking at financing, you will see the words interest rate and APR. These are usually mistaken as being the same, but they are actually calculated differently. It is essential for borrowers to understand both. Below are details on Southern CA home loan APR versus interest rate.

Defining Interest Rate and APR

Interest rates affect monthly mortgage payments for the term of a mortgage. This is typically the figure advertised by companies. It does not include the up-front cost of a loan. Fees can differ among loan programs and financing companies. For example, there may be pre-paid interest for one loan but not another. Other costs that might be included are origination and services charges. The APR reflects the interest rate and certain fees, so it balances out the information.

Why APR Is Important

When weighing different mortgage programs from one or more lenders, the APR is a standard that may be used. You may be presented with a lower interest rate with greater fees and a higher rate with low fees. The final expense includes both the up-front fees and what you are responsible for over time. The APR can therefore help you better evaluate alternatives.

Loan Amount Term Interest Rate Up-front Cost APR
100,000 30 years 5 percent 1,000 5.09 percent
100,000 30 years 4.5 percent 4,000 4.85 percent

How APR Figures Are Compiled

There are some things that borrowers must keep in mind when it comes to APR figures. It is formulated over the length of a mortgage. If you were to pay off your mortgage in a shorter time period, the actual APR may be a greater amount. Furthermore, one mortgage that seems to offer a better APR than another might end up looking less desirable if the number of years were adjusted. The lowest APR is not automatically the better option. Since most borrowers do not retain the same mortgage for its full term, this can be important.

Loan Amount Term Interest Rate Up-front Cost APR
100,000 5 years 5 percent 1,000 5.41 percent
100,000 5 years 4.5 percent 4,000 6.12 percent

Additionally, certain APR calculations are not exact. For example, the rate on an adjustable rate mortgage will fluctuate but that change cannot be forecasted. Therefore, they are calculated based on the assumption that the amount will remain the same,..when in fact, they are likely to.

More On Southern CA Home Loan APR Versus Interest Rate

To complete a valid comparison of your alternatives, it is essential to obtain quotes close together in time (on same day if feasible) since rates continually move up and down. Also remember that your actual rate is not set until you lock in. Always look at the interest rate and APR together to better understand the loan and the costs associated with them. An experienced loan officer can furnish other advice on Southern CA home loan APR versus interest rate.

Southern California Home Prices Rising

Southern CA has always been a desirable market for home buyers. It’s no surprise, then, that Southern California home prices are on the rise. Here’s a look at what’s fueling the current surge in prices and what this means for real estate investors.

Supply Less Than Demand

Demand is pretty high for homes right now as buyers look to lock in interest rates before they rise later this year. Buyers also want to take advantage of improving market conditions and perhaps earn equity more quickly than normal. Unfortunately, the supply of listings on the market is low. It simply is far lower than the amount of demand.

Bidding Wars

So, what happens when there are far more buyers than there are home available? Bidding wars are becoming prevalent. Buyers competing for listings naturally drive up the selling price of homes. With each home that buyers lose bids on, they tend to creep up higher and higher in price on future offers,…desperate to finally win out and get into a home quickly. This sense of urgency also causes buyers to act more quickly when homes enter the market.

Increased Home Prices

Home prices within the six counties of Southern California recently saw its biggest increase in over a year. The median price for single family homes increased by 7% in just one month (from January to February of this year), according to CoreLogic. That’s more than we sometimes see in a whole year! In fact, prices have been steadily rising each month for the past few years.

Impact of Southern California Home Prices on Investors

Fortunately for investors, bidding wars don’t necessarily impact the prices of homes that they would purchase. Typical home buyers look for properties that are move-in ready, whereas investors target homes requiring extensive rehabilitation. So, there’s not often direct competition with those buyers. Once homes are purchased, rehabilitated, and marketed for resale, investors benefit from the surging Southern California home prices. Returns are maximized by ever-improving market conditions. These market conditions present a great opportunity for investors to maximize their earnings and reach goals within shortened timeframes.

If you’d like to participate in the Southern California real estate market, take a look at our investment partnerships. They allow you to invest without getting bogged down by day-to-day real estate operations. It makes investing in real estate easy and straight forward.

Southern CA Home Ownership Tax Tips

It is tax time! Take advantage of tax discounts provided to property owners. The Southern CA home ownership tax tips in this article may help with your tax preparation.

Retrieve a Copy of Paperwork from Your Closing

If you purchased or refinanced a house in 2016, you should have been given a form that details closing expenses. Many of them may be applied as deductions on your income taxes and may not appear in other paperwork. Examples of costs that may be deducted are points, pre-paid interest, and property tax adjustments. Provide a copy of such statements to your tax preparer so they may be properly deducted.

Refer to the Form 1098 from Your Mortgage Company

Interest expenses on primary mortgages, secondary mortgages, home equity lines, and home repair loans are often tax deductible. Each mortgage company will provide a mortgage interest statement to you. These statements should specify amounts paid during the previous year. It may also include charges for PMI, which may be deductible if you qualify.

Find Out What You Paid for Property Taxes

Property taxes are another cost that has tax benefits. If you contribute tax money into escrow every month, that monthly total is not what you should deduct. Figure out the correct total based on invoices sent by your local municipality and the statement from your closing.

Calculate Money Spent on Home Improvements

Keep receipts for all property repair costs. Some improvements, such as energy efficiency improvements (windows, doors, heating and air conditioning systems) may qualify for energy tax credits. Renewable energy upgrades such as solar panels qualify for an additional tax credit program. Even if your upgrades do not qualify for any particular tax credits, this information may help decrease any taxes that might be owed on your future property sale.

More on Southern CA Home Ownership Tax Tips

Retaining good records is a must when it comes to taxes and taking advantage of your home ownership benefits. Whether it is interest and tax payments or home renovations, tracking expenses can help with the 2016 and subsequent tax periods. Check our blog for more property ownership and Southern CA home ownership tax tips.

Tips For Renovating Green In Southern CA

Consider an environmentally friendly approach to your remodeling project. Green construction essentially involves using certain materials and practices that are advantageous for the earth or for your well-being. The following are a few tips for renovating green in Southern CA.

Thinking Green When It Comes to Materials

Purchase locally produced materials. This minimizes the fuel consumption for transportation. Local products can be better adapted to the regional temperature. Also select recycled materials to help reduce the amount of refuse in land fills. Evaluate products such as bamboo as they are enduring and easily manufactured. Also consider what products include and choose those with low volatile compounds. This will help maintain indoor air quality. Environmentally friendly materials may be easily adapted to your repair project.

Importance of Efficiency

Efficient products may not only improve the environment but also save on gas and electric bills. Windows and doors can be found in energy saving options and when properly installed will limit air leaks. Appliances such as high efficiency washers usually reduce water waste. In general, select Energy Star rated options which use less electricity. Consider other materials that may have energy efficient choices such as low-flush toilets. Each one will make a small contribution to saving natural resources and saving you money.

Practices that Reduce Waste

During your remodel, think about giving away old materials rather than disposing of them in the trash. Most refuse can be salvaged. Eliminate waste by not running water while brushing teeth and storing rain water for gardening.

Tips For Renovating Green In Southern CA

Going green may make your property more comfortable, preserve natural resources, and save money. For a little extra work, it generates a significant return. Natural resources are quickly withering away and we all should help. This blog post on tips for renovating green in Southern CA was prepared by Matthew Rapoport at Homes Inc..

Southern CA First Time Buyer Guidance

Purchasing real estate for the first time can be stressful. The Southern CA first time buyer guidance below may make it less confusing. Houses are a major investment and buyers should know the basics when beginning.

Before Starting a Property Search

Find a Reputable Lender

Interview a local loan officer and obtain a pre-approval. Different lenders may offer varying programs. Review the services and applicable charges to determine the best program. This give you a sense of the potential up-front and monthly costs of property ownership. This also helps determine your maximum purchase price.

Hire a Real Estate Professional

Find a real estate broker to guide you through the property buying process. Select someone that understands your needs. Knowledgeable Realtors will help identify properties, negotiate offers, and facilitate a less stressful transaction. This expertise can be essential first time buyers.

During the Real Estate Process

Real Estate Showings

Only see homes within your price range. This prevents the heartache of wanting a home that you cannot purchase. Viewing listings will take extensive time, so keeping to your limits will also preserve valuable time.


Real estate agents may offer guidance on offers and negotiating them, but they do not render legal advice. If you require legal counsel, think about employing a local real estate attorney to interpret terminology and request any necessary changes to them. It is important that you sufficiently understand the terms and obligations of any contract prior to signing them.

Property Inspections

Inspections are not intended for discussing price changes as they may not identify any problems at all. Also stay away from negotiating obvious issues. Such strategies often fail and result in wasted inspection costs. In situations where problems are uncovered, homeowners can offer to address problems, give closing concessions, or be unable to do anything. Try to be reasonable with your demands and sellers will be more willing to accommodate them.

Final Walk-Thru

Before the closing, you traditionally have an opportunity to walk thru the home one last time. It is a good idea to schedule this for after the sellers have vacated the property. Resolve any issues before completing closing paperwork as completing the closing expresses your acceptance of the property and its condition.

The Closing

All parties signing any documents must have acceptable identification. Any amounts owed must be certified. Also bring your checkbook for any last minute corrections. Once the settlement documents are put on record, the home is yours!

More Southern CA First Time Buyer Guidance

The property buying process will be less intimidating if you maintain an introductory understanding of what will take place. For details beyond what is included in this Southern CA first time buyer guidance, contact Matthew Rapoport at Homes Inc. by calling (213) 334-4141 or by emailing [email protected]

The Importance Of Property Insurance – Southern CA Property Insurance

Southern CA property insurance protects homes owned by individuals. It is typically mandatory for homes with a mortgage, but even without one, it is critical to maintain. The following are details on the importance of property insurance.

The Importance Of Property Insurance

Real estate is one of the biggest investments that you may make. As a property owner, you also have liability. Damages can be extremely expensive and may significantly impact your living situation and personal finances. This is the importance of property insurance. Not doing so may have dire consequences.

Property Insurance Coverage

Property insurance can include a wide range of coverage. It can cover damages to the structure, personal property within, accidents on the premises, incidents involving the homeowners, or weather related damages,..just to list a few. Each of the above have particular restrictions. Some may be part of a standard policy and others are additions or may not be available at all. The property location, such as those in high-risk natural disaster areas, may in some cases limit what options are offered. Homeowners must stay informed of what is included in their policy.

For homes with mortgages, the value of the policy must normally be equal to or higher than the home loan balance. Lenders mandate this insurance to secure the amount of money they have loaned to you. Therefore, their name and address will typically be included in the policy.

How Expensive Is Property Insurance

The charge for property insurance depends on the situations insured, the dollar value of coverage, the particular insurance provider, the features of the property, the location of the home, the amount of your deductible, and other factors. Most companies offer discounts for items such as security systems and certain upgrades. Another source of savings is to purchase additional policies, such as auto insurance, from the same provider. Premiums are generally invoiced once a year and payable in advance. If you have a home loan, monthly increments may be deposited into an escrow account with the mortgage company. This is a way of making sure that your coverage does not lapse.

Choosing Southern CA Property Insurance Companies

Homeowners have the freedom to select their particular insurance provider. Additionally, they can switch companies as desired. As with any type of service, you should evaluate more than just the premium. Property owners should assess the types of coverage and other services offered by Southern CA Property Insurance companies. When disasters occur, it can be a very difficult time. Using a company that makes the claim process easy and provides a high level of customer service may be worth the additional expense.

Introduction To Income Versus Debt Ratio For Southern CA Financing Pre-approvals

Financial information plays a big role in home loan pre-approvals. All mortgage companies evaluate your assets, income, credit score and debts. These affect whether you qualify for financing and how much of a mortgage you qualify. This blog includes introduction to income versus debt ratio for Southern CA financing pre-approvals.

Evaluating Income

Mortgage companies will consider your total income per month. This includes recurring items that can be confirmed. Salaries are the most common income type. Mortgage companies will require paperwork (such as tax returns) for the last 2 years, which gives them a picture of consistency. They may ask for explanations on any atypical items, such as changes in wages. Other sources of income may include spousal support, real estate investments, and stocks. Any items that you attempt to report as income must have acceptable supporting paperwork. Past earnings and potential for future income is obviously helpful. The amount of documentation needed will differ from one lender to another and some exceptions might also apply. It is helpful to inform your loan consultant of all possible sources to figure out what does or does not qualify.

Debt Analysis

Debt describes all continuing expenses such as credit card payments and loans. The exact monthly payments on loans and other structured debt are used. For revolving debt such as credit cards, minimum monthly payments are applied. These amounts are usually listed on your credit report. Many lenders will agree to exclude loans with less than a year left or that you may document another party is obligated to pay it. The figures are totaled to identify overall monthly debt.

Introduction To Income Versus Debt Ratio For Southern CA Financing Pre-approvals

Mortgage companies compare the calculated income to debt to come up with the income versus debt ratio, which must fall within a specific amount. Furthermore, mortgage payments plus your total debt should remain within a specific percentage for loan approval. The particular percentage varies for each lender and for each program.

Sample Scenario

For example, some companies may require the monthly mortgage payment (principal, interest, land taxes, and homeowners insurance) not to exceed 28 percent of your gross monthly income. They may also not permit combined debt to exceed 40 percent of total income. Using this example, a person making 60,000 annually (5,000 monthly) may be approved for a 1,400 per month mortgage payment and allowed 2,000 per month for total debts.

Bear in mind that this is only an example and includes only one part of the financial analysis that can be completed. There are many other considerations, such as credit score and program specific rules. It is important to work with an experienced loan consultant for guidance on income versus debt ratio for Southern CA financing pre-approvals specific to your particular finances.

Southern CA Real Estate vs. Stock Market Investments

Investors commonly evaluate the difference between investing in real estate versus the stock market and whether one is better than the other. The reality is, it’s simply not a straight forward comparison because in both types of investments, the risks and returns can really vary greatly. It’s like comparing apples to oranges. With each breed of apple and each growing season, the results can be different. The same goes for oranges. So, to understand the difference between Southern CA real estate vs. stock market investments, let’s take a closer look at each.

Southern CA Real Estate Investments

There are many different aspects to real estate investments:

  1. Tangible Asset – Real estate is a physical investment. It is quite unique in that respect. You are buying land and physical structures upon them.
  2. Active Investment – You don’t simply purchase real estate and hold it. It’s more of an active investment with ongoing costs, maintenance responsibilities, and decisions to make. Of course, you can obtain assistance with managing those tasks.
  3. Improvements – Unlike other types of investments, there is the opportunity to change the quality and value of your real estate investment. You can make improvements through repairs and renovations.
  4. Income Potential – Real estate can also generate recurring income (i.e. rental properties). The amount of income is tied to the quality of the real estate investment and its location.
  5. Location Specific – Real estate is very location-specific. Values and trends can vary from town to town, or neighborhood to neighborhood.
  6. Market Influence – Like other types of investment, the overall market and economy can impact the value of real estate.
  7. Predictability – Although the real estate market may rise and fall and go through other cycles, it is generally predictable overall. When held long enough, SoCal real estate investments historically follow an upward trend.

Stock Market Investments

When you invest in the stock market, you are investing in companies. Those companies can be in a wide range of industries, and have very different valuations, structures, profit margins, etc. Although shareholders may have some level of “voting” power at times, such as how to reinvest profits, the stock market is mostly a passive investment. You do not control or influence day-to-day operations and decision-making. You rely on publicly shared information to make predictions and investment decisions. Prices can rise or fall based on any number of factors, so it’s much more of a gamble.

Comparing Southern CA Real Estate vs. Stock Market Investments

How can you compare real estate vs. stock market investments when they are so different? Ultimately, both real estate and the stock market can offer great returns, if you make the right decisions. For example, investors who purchased when the real estate market was at its lowest point reaped great rewards when it bounced back to historical highs. Likewise, investors who chose stocks such as Microsoft and Wal-Mart at the right time enjoyed substantial earnings. The potential is available in both real estate and the stock market.

The decision on what to invest in ultimately comes down to your preferences. Do you prefer a passive investment or an active one? Would you like decision-making power and control over its potential value? Do you want recurring income opportunity?

When considering Southern CA real estate vs. stock market investments, you can actually do both! Why limit yourself to one or the other? Participating in both allows you to benefit from what they both have to offer and to diversify your investment portfolio. So although you should understand their key differences, your investment decisions do not need to be mutually exclusive.