How to Avoid Overpaying A Mortgage: Get The Best Los Feliz Loan Terms
When you go to buy a Los Feliz house, if you are like most people you are going to need to get a loan. Because you are borrowing money, you will naturally have to pay a certain amount of interest to the lender. But many Los Feliz homebuyers do not realize that the amount of interest you pay, along with other fees, can vary substantially depending on which lender you use or which Mortgage Broker you use.
Nobody wants to overpay on their mortgage. To avoid spending too much, it is worthwhile to shop around when you are looking for a mortgage loan, and to consider the big picture before you go with a specific lender. Only by considering all the important factors – including interest rate, points and fees – can you determine what makes a loan the best for you.
How to Avoid Overpaying A Mortgage
If you stop and take a look what less desirable terms can cost you over the length of the loan it is considerable. Understanding how to get the best mortgage interest rates becomes critical for maximizing your long-term financial picture. It’s not just the rates – it’s the person you’re dealing with, how well they can convey the important aspects to you and what programs and guidance they can offer. The thought of getting the best mortgage terms possible is something that is naturally appealing to most people looking to buy real estate in Los Feliz and other Eastside Los Angeles neighborhoods. But, it’s much more than just getting the lowest rate in the country. It’s about making sure you’re being educated and that the lender can meet your contingency dates and close on time along with a rate and fees that are predominantly typical for most other lenders. Everyone wants the best deal possible but not if that comes with headaches, delays and incompetence.
Things To Consider About Your Los Feliz Mortgage Loan
There are several aspects to getting a Los Feliz mortgage loan that you need to look at, including:
Interest Rate
The interest rate is what you will here about most, and for good reason. The interest rate is the primary driving force in determining the affordability of buying a home in the Los Feliz area. You should definitely be looking for the lowest interest rate you can find but be mindful that there are other costs that you should also look at, like all the various fees lenders may charge.
While getting a low interest rate is important, if the other costs involved with getting this low rate are exorbitant it can make the whole deal less desirable, especially if you will only be in the home for a short period of time.
How to Avoid Overpaying A Mortgage
Fees
The lender will always charge fees for various things as part of the loan. Other parties may also charge fees, depending on the sale. When you get an estimate for a loan, you should ask the lender to separate out the lender fees from the third-party fees so you can get a clearer picture of who is charging you what. The fees charged in a loan can change the overall attractiveness even if the rate is lower. This is something that should always be considered and Joe Tishkoff, from Skyline Home Loans, is the most transparent Mortgage Lender I know. He is my preferred mortgage lender and for very good reason. He’s honest and forthright.
Down Payment
There will almost always need to be some form of down payment. The required down payment can vary, though. The amount of the down payment can also affect the other costs of the loan. The most common types of loans for purchasing homes are conventional (FNMA, FHLMC and jumbo loans), FHA and VA. Each of these types of loan programs have varying amounts of down payment requirements except the VA loan which may allow a buyer to purchase with zero down. That’s good to know! Finding the right type of mortgage could depend on a number of factors associated with these loan products.
Conventional loans – generally speaking, the minimum down payment with a conventional loan is 3% up to $417,000 in Los Angeles County and 5% down from $417,001 to $625,500. This is not to say that most buyers don’t put more money down. In fact, most often, they do.
FHA Loans – These types of mortgages are very popular due to the fact you are only required to put down 3.5% as a down payment. This can be attractive for a borrower who has a fair or moderate income and OK credit but does not have a lot of money saved for a down payment. In Los Angeles County, 3.5% down FHA loan allow for financing up to $625,500.
VA Loan – a VA loan stands for “veterans affairs” (United States Department of Veterans Affairs) and not veterans or veteran’s administration. A VA loan product specifically for veterans or those who have served our country in the military. You can be active duty, reserves or retired. It’s doesn’t matter. The attraction of a VA loan is also the fact it is a no down payment loan product and usually at a lower rate than a conventional or FHA loan.
How to Avoid Overpaying A Mortgage
Points
There are two types of Points In A Mortgage – origination and discount. Your lender may charge origination points for giving you the loan. You may also buy down your rate to a lower rate by paying discount points for your loan. Each discount point you buy is worth 0.25 percent in rate most often although that varies, so if you bought four points you would drop the interest rate by one percent. That can be a great way to save money but that’s a calculation called the “recapture rate” to determine how many years it will take to recoup the money spent on discount points.
Buying points may be a way for you to wind up paying less for your mortgage each month. Have Joe Tishkoff talk about the points in dollars so you can get a clear picture of the benefits versus a zero point loan or one with no lender fees at all. He will offer advice that can save you thousands over the life of the loan.
There are times when it makes sense to pay points and others when it does not. It really depends upon how long you intend to live in a property and how much you’ll actually save each month in payments. A mortgage point is one percent of the amount you are borrowing on your loan. For example if your loan amount is $950,000, one point would equal $9,500. When you pay points with your mortgage you are essentially buying down your loan rate and “pre-paying” your interest up-front. The more points you pay generally the more lower the rate you will receive.
The way to figure out if you should be paying points or not is by projecting how long you will stay in the home. What you need to calculate is the difference in mortgage payments between paying points and not paying points. There will be a certain length of time whereby the difference in these two situations will be made up by how long you remain at the property. The longer you remain in your home, the more it makes sense to pay points. Does this make sense? Knowing that information can save you dollars! Lots of them!
How to Avoid Overpaying A Mortgage
Closing Costs
Given the variable nature of closing costs it is important to understand exactly what you are paying. When factored into the loan it can really change what you are actually paying compared to other loan programs where the closing fees are not as high.
When purchasing a home sometimes it can be advantageous to ask for the seller to pay for a portion of your Closing Costs as part of the purchase. If the seller is still netting what they want this can be a win-win for both buyer and seller!
Mortgage Insurance
You should find out from the lender if Mortgage Insurance will be required on the loan so you can factor all of your costs. In most circumstances mortgage insurance will be required when you are not putting 20 percent down.
Have Your Financial Ducks Lined Up
When you are ready to purchase a home it is extremely wise to go out and get a Mortgage Pre-Approval beforehand. This will show the seller you are serious about buying a home and give them comfort that you are financially qualified to do so. Do not make the mistake of handing me a pre-qualification letter. This is very different than a pre-approval. In fact it does very little for anyone because there is no verification of employment, income, or credit history. These are all requirements of getting a mortgage, and Joe Tishkoff with Skyline Home Loans will be happy to help you understand the difference between a pre-approval and a prequalification letter and the process and time involved.
Los Feliz Real Estate Expert
I’m a local real estate agent and It would be my pleasure to help you find the perfect property to call home in Los Feliz CA, or if you’re thinking about selling a house, condo, or multi-family building in, Los Feliz, Silver Lake, Atwater Village, Glassell Park, Mount Washington, or Downtown Los Angeles, it would be a privilege to help you get top dollar for the sale of your property.
Lets chat sometime. 310-913-9477 or contact me.
