Making homeownership a reality

(BPT) - It is a hot housing market across much of the state — with prices and sales increasing to record levels. The California statewide median home price is $813,980, up 34% from April of 2020 and year-to-date home sales across the state jumped 26.2% from the same time period. It’s a seller’s market and buyers are feeling the heat.

What does this mean for you if you are looking to buy a home? Golden 1 Credit Union offers information on its prequalification process and explains the following essential assessments:

Income – Eligible income is what you expect to bring in steadily for the next three years. Lenders are required to document any consistent monthly income and the likelihood of continuance. This can include salary from your job (whether employed or self-employed), pension, Social Security, secondary employment, tips, retirement, rental property and many others. The goal is to prove you have dependable income that will continue for at least three years.

Credit – Your credit will be analyzed for quality and quantity and it is important to understand both. Quality is your history of prompt payments. This doesn’t mean your credit history has to be perfect, but it should be good or at least fair. Given the different pricing variables of conventional, jumbo or FHA/VA loans, the better your quality of credit, the better your interest rate will be. Good credit goes a long way toward securing the best interest rate available. Golden 1 can run a credit check for free to verify a credit score. Quantity is the ability to live within your means. Carrying too much debt can be a liability during the mortgage analysis, which combines all proposed housing expenses (principle, interest, property taxes, homeowner’s insurance, and mortgage insurance) plus your monthly consumer debt, and should not exceed 45%-50% of your gross income.

Assets – You will need access to sufficient seasoned funds with acceptable reserves. Seasoned funds are those that have been in your accounts for a minimum of two months. This includes checking, savings, investment accounts, and retirement funds. However, use of retirement funds requires documentation of the withdrawal or loan terms that give you access to the account. Cash and borrowed money typically do not qualify as seasoned funds, but if you can document a two-month history of those funds in your accounts, they would be considered. In many cases, gift funds from immediate family members may also be considered eligible funds.

These general parameters should help you understand if homeownership is within your reach, and if it’s not, how to set goals to make homeownership a reality. For more information or to start the process, you can visit a home loan advisor in a Golden 1 Credit Union branch or a home loan center in your area. You can also visit the home loan page on Golden1.com.

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