Financing
Security instruments
California lenders typically use a deed of trust rather than a mortgage: the trustor borrows, the beneficiary lends, and a neutral trustee holds title with the power of sale. Default leads to nonjudicial foreclosure by trustee's sale after the notice of default and notice of sale periods. California gives a borrower reinstatement rights before the sale but no statutory right of redemption after a nonjudicial trustee's sale. Anti-deficiency protections (Code of Civil Procedure sections 580b and 580d) bar deficiency judgments on purchase-money and nonjudicial foreclosures.
Loan math
Loan-to-value = loan ÷ value; down payment is the remainder. Points are prepaid interest: one point equals one percent of the loan amount, not the purchase price. PITI adds principal, interest, taxes, and insurance.
Compliance
Real estate licensees may not originate loans without a separate mortgage loan originator license. Federal disclosure rules (loan estimate and closing disclosure timing), ability-to-repay and qualified mortgage standards, and state usury exemptions for licensed brokers all appear on exams.
Traps
Watch for points calculated on price instead of loan amount, and for second mortgages treated as purchase money (which affects deficiency exposure). An adjustable-rate note's initial rate is not the APR.
Rule of thumb
Points and loan amounts always ride on the loan balance; equity rides on value.
Worked example
A $500,000 home with a $400,000 loan is 80% LTV. Two points cost 2% × $400,000 = $8,000, not 2% × $500,000.