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Mortgages in California - Is Now the Right Time?

Mortgages in California - Is Now the Right Time?

Los Angeles - With housing prices finally cooling off in California and apartment rents going back up in metropolitan areas, is it time to start thinking about buying again? The California market is always going to be a wise investment, but the question is when? Keep reading for 5 factors you need to make sure you're ready to jump into California real estate.

1. You have a budget, but is it realistic?

Having a budget is great - before you can buy a home you need to understand what you can and can't afford - but is your budget realistic for home ownership in California? Not only do you need to find out how much homes cost in your area, but how much energy costs and how much those energy bills have increased in the last ten years.

Especially in California, with it's wildly fluctuating energy costs, you need to be prepared for varying rates, increased power costs and rising fuel expenses.

2. You have a down payment.

Traditionally, you needed a 20 percent down payment. Later, prospective homeowners were getting away with 5 percent down or 0 percent down; but once the housing market burst, lenders began tightening back up. With California's recently slowed housing market, having that 20 percent available for an initial down payment is important. You'll qualify for better loans, lower interest, no insurance premiums and pre-established home equity. That equity can also provide you with extra funds in case of an emergency.

3. You have a reliable source of income.

With a slowing housing market and lenders tightening their restrictions, now is not the time for the California film-industry freelancer, contract worker or part-time actor to go in search of real estate. Remember, buying a home is a long-term financial commitment, so you need a stable and steady income to make those monthly payments for the next 30 years.

4. You have emergency savings.

Do you have enough savings to take you through 4-6 months of unemployment or a medical emergency? Just in case anything happens that throws your regular income off, whether it's job loss, forest fires or illness, you need those savings to fall back on.

5. Your credit is good.

As real estate sales slow down in California, so does the easy credit. To get a quality mortgage, especially for a first-time home buyer, you're going to need great credit. If you have to, take a year to focus on rebuilding your credit by always making your payments on time, consolidating debt and hacking away at high-interest payments.

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