Before we dive into the Top ten real estate loan tips I want to remind you that buying a house, condo, or apartment is arguably one of the largest financial commitments you’ll ever do — but it doesn’t have to be the most traumatic. This is where a great agent and fabulous Mortgage Broker come into the picture making sure you understand the process every step of the way and if necessary a little hand holding never hurt anyone.
Lets take a quick look at the 3 steps to buying a house.
There are 3 steps to buying a house:
1) Get a loan pre-approval
2) Figure out how much you can afford
3) Look for a house.
I work with a preferred mortgage broker who has been tested, vetted and gone through trials by fire. He is the best in the business and in the top 2% for closed volume in the nation. If you’re buying a home in Los Angeles, you won’t find a better lender. Since he’ll be at your side every step of the way, I encourage you to have a chat with him sometime to determine if he is the best fit for you and your family.There is no cost or obligation to get a loan pre-approval.
I realize this is just a snapshot of the home approval and buying process, and we promise we’ll upload an in-depth article highlighting all the relevant things you must know and do before you’re ready to close escrow on your new home. Anyhow, here are the Top ten real estate loan tips direct from your neighborhood Realtor at Silverlakeblog. Enjoy!
Top ten real estate loan tips:
1. Improve your creditworthiness
Your credit profile is very important to a lender, any lender. While you’re preparing to buy a home, be sure you’re responsibly managing your current debt, and chat with your tax person, CPA, or finnancial advisor if possible. Always pay your bills on time and chip away at your outstanding balances by paying more than the minimum whenever possible. In most cases, lenders like to see a borrower with a debt-to-income ratio of 30% or less. Also, make sure you’re paying down your higher interest rate debts first like student loans or credit cards.
Is your credit mortgage-ready? Get free credit advice from Joe Tishkoff.
2. Save for money down
Although a 20% down payment on a mortgage is ideal, it’s not mandatory and I often successfully sell properties for sale in Los Angeles for a lot less. Many lenders expect buyers to put down at least 3%, aside from the Federal Housing Administration, which requires a 3.5% down payment (FHA) Loans. However, if you’re interested in building sizable equity right away in a blink of an eye, stash a hefty amount of cash to take to the closing table.
Maybe you have a wealthy parent or a great Uncle from the midwest that left you $5,000,000? Most of us aren’t that lucky, but that doesn’t mean we’re not buying houses for sale in Los Angeles. Additionally, do your due diligence to find out about any local down payment assistance programs that may be available to you. Do a little Google searching and you may be pleasantly surprised with your findings.
3. Research available loan types
A fixed-rate mortgage isn’t right for every homebuyer anymore. Neither is an adjustable-rate mortgage. If you plan to stay put in a home to raise a family, you might consider a 30-year loan (in theory this sound like a fairytale life, and everyone will agree that this is their plan. As a real estate professional selling homes for sale in Los Angeles, I have yet to have clients stay in a property longer than five years. This is just the reality of the situation. Lifestyles change.
Conversely, if you’re planing on moving in 10 years or less, an adjustable-rate mortgage, or ARM, could better suit you. Interest rates on ARMs are fixed for the first several years of the loan and often start out lower than rates on 30-year fixed loans. There are also jumbo loans, which are becoming more typical in the Los Angeles real estate market and not just reserved for purchasing luxury homes anymore.
4. Don’t forget to consider your lifestyle
When you purchase a home, you’re also investing in the community that surrounds it. Are you a Downtown Los Angeles artist type not needing grass or public school districts or are you planning on the white picket fence in Eagle Rock with 2.5 children?
More importantly, your home should be central to every other aspect of your life. As you shop for homes, consider your work commute and extracurricular activities in which you and your family might participate. If you absolutely love the ocean and need to be in Malibu every weekend buying a spot in Eagle Rock may not be the wisest bang for your buck.
5. Remember budgeting is key
Remember when your nagging grandmother told you to save your money? She was right! Your monthly mortgage payment won’t be the only expense you have as a homeowner. There’s also homeowners insurance, property taxes, maintenance costs and, more than likely, homeowners association fees, and the list goes on and on, which is why it’s necessary to stick to a budget.
I enjoy working with Christina Nazareno from Northwestern Mutual. She’s a wiz at numbers and planing and will put you on a budget and roadmap to retirement before you even buy the ticket. Seriously, she is great at her job, a pleasure to chat with and is happy to help you calculate and determine a feasible home loan amount that will fit within your budget and still save a few bucks along the way.
6. Consult a few professionals
The homebuying process is a challenge but doesn’t have to be daunting, which is why it helps to have the assistance of qualified professionals surrounding you that you feel comfortable working with and that you trust.
Ask questions of your lender and real estate agent, or financial advisor, and reach out to a housing counseling agency approved by the U.S. Department of Housing and Urban Development for further guidance if you’re one of those that loves to know everything about everything. More information can only help, but you don’t want to be so cautious that you miss the perfect opportunity. My advice is trust the experts and follow your gut.
7. Shop for a lender
The homebuying process involves more than just chasing a favorable interest rate. You have to find the best mortgage lender for your specific financial situation. The large banks like Wells Fargo, Chase, and Bank of America can be great for discounted interest rates and preferred loan terms, however; their lending guidelines aren’t very flexible so if you don’t fit nicely inside their pre-designed boxes you’re out of luck.
That’s not a reason to worry though, there are hundreds of aggressive loan options outside of the conventional banks you’ll potentially have as options. And it’s good to remember that no two set of lender fees are alike, so it’s important to get loan estimates from multiple lenders before making a decision.
8. Seek a pre-approval
Now that we have covered almost all of the Top ten real estate loan tips, before you rush into house-hunting mode, get a mortgage pre approval from a mortgage broker you trust. This process is used to help determine how much money you’re qualified to borrow for a home purchase. Once you’re pre-approved, and if you’re working with a talented mortgage broker that process shouldn’t take longer than a couple of days, you’ll have a more realistic expectation of which for-sale houses fall within your budget. Then it’s time to have me go to work for you and find the perfect Los Angeles house to call home.
9. Why does everyone forget the closing costs
Not only do you need a solid down payment for a home purchase, don’t forget you’ll have to pay closing costs, unless we negotiate sellers pay all closing costs. The loan estimate you receive after applying for a mortgage gives you an idea of the “cash to close,” or the money you need to complete the transaction. There are some closing costs for which you can shop and save money, and others that are fixed.
10. stuff dollars away for a rainy day
It’s not encouraged or practical to drain your savings to fund your down payment or closing costs and leave nothing in the account to cover emergencies. A useful rule of thumb is to stockpile 3 to 6 months worth of living expenses away that you never touch. That money is there strictly as an emergency fund. This deters you from tapping credit cards or loans and amassing more horrible scary debt.
If you follow these Top ten real estate loan tips you’ll be ahead of the game, and the home buying process will be virtually painless and smooth sailing.
Top ten real estate loan tips
By Glenn Shelhamer
I’m a local Los Angeles Real Estate Agent. It would be my pleasure to help you find the perfect property to call home in Silver Lake, 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, Echo Park 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.
