If you’re interested in buying your first home in Los Angeles, but aren’t sure where to begin, here are a few key points about homeownership you should understand.
1. Down Payments and their myths
Saving for a down payment is sometimes viewed as one of the biggest obstacles for homebuyers, but that doesn’t have to be the case. As Freddie Mac says:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”
According to the most recent Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), the median down payment for homes purchased between July 2019 and June 2020 was only 12%. That number is even lower when we control for age – for buyers in the 22 to 30 age range, the median down payment was only 6%.
2. Home Much Can You Really Afford
As an article recently published by NAR points out:
“Millennials underestimated how much home they can afford right now, how much interest they would pay over a 30-year mortgage, and how much home values appreciate, on average, over 10 years…”
Knowing how much home you can afford when starting the buying process is critical and could be the game-changer. Need help with that? We got you!
3. Interest Rates and The Economy
Finally, mortgage rates will start to rise along with home prices appreciating. Therefore, delaying buying a home now could cost you much more later. Sam Khater, Chief Economist at Freddie Mac, says:
“As the economy progresses and inflation remains elevated, we expect that rates will continually rise in the second half of the year.”
Most experts expect interest rates to rise in the months ahead, and even the smallest increase in rates can decrease your purchasing power. If you’ve been on the fence about buying a home, there’s no time like the present.
4. Types of Loans + Your Credit Rating
Finally, you will need to determine what type of loan you will qualify for based on several factors:
- your credit score
- your down payment
- the monthly payment you can afford.
Working with a suitable loan officer is a great place to start in determining these variables. Different loan types have different requirements, so working with someone seasoned is key. We would love to put you in touch with the right people if you are considering a non-conventional loan (FHA, VA or other).
Ready To Buy Your First Home?
If you feel overwhelmed by the prospect of starting your home search, you’re not alone. At Aspire Los Angeles, we believe everyone should have the proper resources in preparing for home ownership.
Connect with us to learn more about the process, what you’ll need to start your search, and what to expect in terms of payments, loan options, and how we can guide you to home ownership.