By CODY CARRAS | Special to the Palisadian-Post
Buying a home can be a rewarding yet stressful undertaking, especially when you are a first-time homebuyer. From getting your financials in place, to understanding how an offer is made, to making sure all your inspections are in place, to the tail end of scheduling movers, the process requires a certain amount of commitment and dedication.
With a lot to think about during escrow, I always encourage my first-time homebuyers to better understand two things: their financials and the local market.
When getting pre-approved for a loan through your local lender it is a great idea to understand your budget. With today’s rental market in Los Angeles being generally high in cost, most monthly rental rates are equivalent to a home mortgage. The most common answer I get from renters when asked why they do not purchase a home is the down payment, which is important to understand.
Most of the time, a buyer obtaining a loan with a down payment of under 20 percent will be required to pay for mortgage insurance. Mortgage insurance lowers the risk to the lender of making a loan to you, thus helping you get approved for a loan you might not have otherwise qualified for.
Mortgage insurance is typically included in your monthly payments and increases the cost of your loan. It is best to evaluate with your accountant if paying mortgage insurance is the best option to buying a home now and possibly refinancing down the line when more equity is built up to remove the mortgage insurance, or to save more funds and be able to put at least 20 percent down before purchasing your first home.
Understanding the real estate market you are buying in is equally important. Many neighborhoods have selling points that help home values thrive such as walkability, schools, and future or current development.
I frequently have first time homebuyers ask me to help guide them to up-and-coming neighborhoods that are more affordable than a currently established neighborhood. The advantage of this is to get more out of a home with your money, whether that is space, land or updates to the property.
There are signs in today’s market that prices might be stabilizing or even slowly decreasing. If this is the case in the marketplace you are looking in, then buying a home you can add value to is a great idea. Adding value to a home can be as large as expanding or reconfiguring, to smaller tasks such as adding curb appeal, paint or new flooring.
The advantages of home ownership are endless, and by better understanding and learning the process, the area you are buying in, as well as your finances, will make owning your dream home even sweeter.
Carras is a sales partner with the Marguleas Team that has sold close to $1 billion in properties and was selected by Wall Street Journal as one of the top 60 agents in the country out of one million agents. Cody can be reached on his cell at 310-460-9561. For more information, visit amalfiestates.com.
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