Although the meaning of the American dream has changed over the years, it has always included owning your own home. To many people, owning property represents financial maturity and independence that was earned through hard work and smart financial handling.
Regardless of one’s status, buying a home is a big financial decision. It may very well be the biggest financial transaction that most people will make in their lifetime! As such, there are many things to know about it before buying a particular property.
The 3 Important Home Buying Facts
Here are three facts about buying a home in Los Angeles that you should know today to get you started:
- You get more for what you pay for. Buying a home offers distinct advantages over renting. In many cases, your mortgage’s monthly payments should either be as close as your rent or almost the same as it. However, instead of just giving money to your landlord, you get to own the property at the end of it all. Another bonus is that you are earning equity in your home with each payment. Once you earn enough equity, you can cash it in to pay for other expenses. Some people use that equity to pay for a renovation, while others use it to pay for hospitalization or college tuition.
- You can get lower down payments. One of the biggest barriers to homeownership is its steep initial cost. Many people think that you need at least 20% to buy a home! The truth is, there are ways to reduce that figure to more attainable figures. It’s always better to pay higher down payments to get lower monthly payments, shorter terms, or avoid paying mortgage insurance. However, you can potentially get away with lower down payments by taking advantage of federally backed home loans available to you. For example, you could lower your down payment to as little as 3.5% if you qualify for an FHA loan. FHA loans reduce your risk profile and offer low-interest rates. To be eligible for an FHA loan in Los Angeles, you need to have a debt-to-income ratio of below 45%. You also need to have sufficient and documented income for at least two years! Having a credit score of 580 and higher will get you qualified for a 3.5% down payment. Credit scores of 500 to 579 will land you a higher but still more affordable 10%. Meanwhile, eligible active-duty service members, veterans, and their surviving spouses can get a VA loan. Like FHA loans, VA loans are backed by the US government and guarantees lower interest rates than conventional loans. However, the primary advantage of getting VA loans in Los Angeles and elsewhere is that it may allow you to buy a house with zero down payments and no private mortgage insurance.
- You’ll benefit from a mortgage broker’s guidance. With the wealth of information available on the internet today, it’s tempting to try buying a home without a mortgage broker. You can develop a good working relationship with lenders and even shop around for the best deals. However, a good local mortgage broker will almost certainly have more experience in the job. Moreover, your chosen broker will always look out for your best interests. They will spare you from the hard work and patience needed to put a loan together. These professionals are especially helpful for medium to low-income buyers looking for the best deals. Since these groups of buyers can be considered high-risk by lenders, putting a loan together will involve dealing with many rejections and negotiations. Working with a mortgage broker in Los Angeles will help you secure the loan faster, allowing you to put in an offer for your chosen property as soon as possible.
Buying a Home in Los Angeles with Shannon Christenot
Buying a home is a financial decision that should not be taken lightly. However, it doesn’t have to be the confusing and laborious process that many people make it out to be. As your flip through listings in your local area, make sure to find the best mortgage lender as well. Your mortgage broker will help you find the best deals and put you on the path of being a homeowner in no time.
Shannon Christenot is a mortgage broker in Los Angeles. We offer conventional loans, FHA loans, VA loans, USDA, and more. We also help our clients with mortgage refinancing to take advantage of lower interest rates and more. Dial (818) 601-2231 today to schedule a free consultation!