The Golden State of California is always one of the most preferred states for home-buyers. Known to be one of the most prosperous states in the country, the state offers a multitude of opportunities in every field. So whether you are a guy looking for a better paying job or a retiree looking for an ideal place to settle down, you would surely have your desires fulfilled in California. This is the reason why a large number of people from all over the United States look towards buying a property in California. If you dream of having a home in the Golden State, then you can make the process easier by getting a mortgage loan. Home mortgage loans make it easier for you to arrange for the necessary finances to buy a property. Here, we are going to take a closer look at the things that you should know if you want to get a mortgage loan in California. What is a mortgage? One of the most common questions that most beginners ask is ‘What is a Mortgage?’ Well, before you apply for a mortgage loan, it is better to understand the concept of mortgage. A mortgage loan can be technically is a financial instrument which can be defined as a pledge to return the loan taken to buy a property. You take a loan from a lender and you promise to pay back the loan with the interest, this pledge is called a mortgage. In most cases, you would need to keep a security so to assure the lender that you would keep the pledge. For example, let us say you want to buy a property which is priced at $250,000 and you have only $100,000 with you. In such a case, you take the remaining $150,000 as a loan on a mortgage. In most cases, you would need to keep the house as a security for the mortgage. If you want to buy a home in California, then you get a number of options when it comes to home mortgages. Some of the most useful ones are - Conventional Loans Federal Housing Administration (FHA) Loans U.S. Department of Agriculture (USDA) Loans Department of Veteran Affairs (VA) Loans – which are open only to veterans and members of the U.S. military. California Department of Veteran Affairs or Cal-Vet Loans – which are similar to VA Loans but the veteran, needs to buy a home in California. Mortgage Interest Rates The interest rate of your mortgage loan plays an important role in determining the amount of money you have to pay every month towards your repayment. Therefore, it would really save you a lot of money if you are aware of the interest rates. Conventional loans have higher interest rates compared to government backed loans like California VA Loans, FHA Loans, USDA Loans and Cal-Vet Loans. Therefore, you should try to get a government backed loan as a lower interest rate would mean lower monthly payments. There are two types of Mortgage rates – Fixed rate and Adjustable Rate Mortgage (ARM). In Fixed Rate mortgage, as the name implies, the interest rate stays constant throughout the tenure of the loan. On the other hand, ARM rates change over time based on the prevalent market conditions. If you want to know the mortgage rates, then you must get in touch with a professional mortgage lender Mortgage Insurance Mortgage Insurance is an instrument used by lenders to offset their losses in case of a foreclosure i.e. when you are unable to pay the loan back to the lender. If you are paying a down-payment of less than 3% of the loan amount, then you would need to pay for mortgage insurance. The premium of the insurance would be added to your monthly payment. However, once your mortgage balance goes below 80%, you would no longer need to pay for any mortgage insurance, in case of conventional loans. However, certain loan programs like VA Home Loans California don’t require you to pay for any mortgage insurance. Credit Score Lenders would naturally want to give loans to people who can pay back the loan. To determine the eligibility of a person, lenders treat the Credit Score of a person as a guiding standard. If you have a high credit score, then banks would consider you to be able to pay back the loan and you would get loans more easily. In most cases, conventional loans have a higher credit score requirement since the risk to the lender is higher. On the other hand, government backed loans have lower risks and hence, you can get a FHA Loan or a VA Loan even if you have a low credit score. The credit score of an individual is composed of a number of factors and the weightage given to each of them differs, based on the technique used to calculate the score. The most important constituents of a credit score is your income, your debt-to-income ratio and certain others. Getting a VA Loan in California If you are a veteran or a current member of the U.S. Military, then perhaps the best option for you would be to get a VA Loan in California. These loans, which are guaranteed by the Department of Veteran Affairs of the U.S. Government, come with a host of advantages like zero down-payment, no mortgage insurance, lower interest rates and much more. On top that, you can even reduce the interest rate on your VA Loan by refinancing it with a VA Interest Rate Reduction Refinance Loan (IRRRL). To get a VA Loan in California, all you need to do is to get in touch with a professional VA approved lender in California and they would take care of the process. You would need your Certificate of Eligibility (COE) which would show that you are eligible for a VA Loan. You can get it yourself or you can ask your VA Loan Lender in California to get it done for you. Hope this article was of use to beginners who are looking to buy a property in the state of California. Remember, it always takes a little bit of awareness to take the right choice. So, get a mortgage home loan in California and own a piece of paradise in this Golden State.