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Trulia Los A…, Other/Just Looking in Los Angeles, CA

What should a first-time home buyer do to secure the best interest rate possible on their loan?

Asked by Trulia Los Angeles, Los Angeles, CA Fri Oct 19, 2012

Clearly educating yourself as much as possible is key, but how many different people should you talk to? Who exactly should you talk to? Are referrals enough?

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Yeprem P. Davoodian, M.A.’s answer
I would recommend you to contact 2-3 persons/companies who deal with loans (a bank, a loan office, etc...). Talk to them and ask what options there available for 1st time homebuyers. If this is not enough and you have are not satisfied, call a a few more. Also, go with someone who is honest with you and that you feel comfortable with. This is a good start and will probably get your questions answered.

The California Association of Realtors released this information that you might find helpful:

Average interest rates for 30 year fixed mortgages:

1980's - 12.7%
1990's - 8.1%
2000's - 6.3%
2010 - 4.69%
2011 - 4.45 %
September 2012 - 3.47% LOWEST EVER!

I hope this helps.

Yeprem P. Davoodian, M.A
0 votes Thank Flag Link Tue Oct 23, 2012
Great question! As a first-time home buyer, I suggest you contact 3 or even 4 loan officers to discuss your options...start with your personal bank, then the referral, and finally a couple of local direct lenders that have years of experience and good reviews (Trulia is good for this). After the consults, pick 2 of the LO's you feel most comfortable with and get pre-approved for your loan. Later, when you finally find a property and open escrow, shop both lenders you've been pre-approved with and see who can offer the best rate, costs, and turn around times at that time.

Good luck!

Mike Pandazos
Metro Lending
0 votes Thank Flag Link Fri Oct 19, 2012
Get the best referral possible-this means a referral from someone in your circle that you trust that is very satisfied with the service they received. Also, someone that was happy with the rate and the terms of the agreement and someone that would use the lender again. A referral is always better than a shot in the dark!
0 votes Thank Flag Link Fri Oct 19, 2012
Shop around! However, your die may already be cast. Much depends on your credit score, size of your downpayment, how much debt you have and your income. Things you can't alter quickly except maybe your downpayment
0 votes Thank Flag Link Fri Oct 19, 2012
Many first time buyers get FHA loans or conventional loans to buy their first property. Primary factors to get into consideration when you apply for a loan are fico score, debt ratios, down payment, and type of property.
And to secure the best rate possible you should interview at least three loan officers. Even though most lenders rates are very competitive nowadays, you should have each loan officer explain the difference between FHA and conventional financing.
Most loan officers will tell you about the same information, but you should look for the one who is service oriented, integral, and trustworthy.

Good luck.
0 votes Thank Flag Link Fri Oct 19, 2012
I would be more than happy to give you the names of three lenders that can go over your credit score and get the best loan that suits you.
Clint Lohr, 818-730-8635,
0 votes Thank Flag Link Fri Oct 19, 2012
Hello Trulia Los Angeles!

It's important to understand what type of property you are buying. Condos have restrictions and sometimes require a lender who can do a 'portfolio' loan if the property does not fit into Fannie Mae's guidelines. The fist thing you should do is find a great Realtor to guide you through the process. Realtors are the experts on which lenders can get the job done, on time and for the least amount of money -- use this resource! There is no need to struggle through this alone, your Realtor can make the process so much easier for you! They understand the pitfalls and tricks. If you need help finding one, give me a call and I will help you screen them :)

The other two factors that you need to understand is (1) If you have enough money for down payment to go conventional or if you need FHA; and (2) How your credit score will affect your interest rate. Then shop for the specific loan program that fits your needs and the needs of the property. If you don't have 20% down, you will probably need to pay mortgage insurance. One thing that many people don't understand is that you can pay a slightly higher interest rate and NOT have to pay mortgage insurance. This is called a "no MI loan'. With the exceptionally low interest rates today, this has proven to be a good choice for many of my clients. Different lenders have unique programs, so you really need to figure out which is best for you and THEN shop around for rates and closing fees. Once you know what your credit scores are (all three), then lenders can give you quotes (Good Faith Estimates).

If your credit score is a little low, be careful with letting everyone pull your credit -- every time it is pulled, your score can go down -- making things worse!

I have found that Credit Unions have very good interest rates and low closing costs because most are non-profit organizations. However, your situation dictates which lender is best for you -- sometimes credit unions don't offer all programs. You need to compare quotes at "par" or "no closing cost" otherwise you are comparing apples to oranges. You cannot compare a par quote to a no closing cost quote.

There are many great lenders and loan programs -- it all depends on which one fits you the best!

Dena Schlutz
Broker / Owner
Estate Professionals
Web Reference:
0 votes Thank Flag Link Fri Oct 19, 2012
Speaking with at least 2 or 3 different lenders is wise. That doesnt mean you have to seek a pre-approval through all 3 - find out about rates, timing, are they experiencing delays, etc. In anticipation of getting a loan be very cautious with your credit - no big financed purchases (car loans, lease), review your credit report to clear any confusion, stay on good terms with your landlord as you may need them to verify good payment history.

Good luck.
0 votes Thank Flag Link Fri Oct 19, 2012
Yes, educating yourself is key.
I always tell my clients to compare with at least two different lenders. Possibly a third.
I recommend First Capital to my clients who have also recommended them.
I'd be happy to give you their contact info if you're interested.
Susan Bo'ur
Coldwell Banker
0 votes Thank Flag Link Fri Oct 19, 2012
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