First of all, congratulations on becoming a Los Angeles homeowner. You could not have chosen a better time; affordability is at an all time high, interest rates are at record lows, and the $8000 tax credit has been extended into the spring.
If I'm understanding you correctly, you want to understand the ins and outs of the financing end of purchasing your first home. Great question, because your financial pre- approval is the underpinning and first step to your home search.
My recommendations are as follows:
1. Get yourself a great, trustworthy mortgage broker. A mortgage broker differs from an institutional banker (such as Wells Fargo or B of A) in that they shop all lenders on your behalf to get the best rate and terms. Sit down with them for a confidential interview and discuss every aspect of your financial situation. A good mortgage broker will tell you what documents you need to have for your first meeting (including salaried or non-salaried income statements, pay stubs, miscellaneous income, assets, and debts) and during your initial interview, will be able to provide you with about five or six scenarios for your home purchase.
How do you find a great mortgage broker? It's a good idea to ask your Realtor for recommendations, and then interview to see who is the best fit. Find out how long they have been in the business, what their closed ratio is, etc., before you agree to give them any of your financial information.
2. Make sure you understand the options in loans out there, based on your purchase price. Your Realtor and mortgage broker should work hand in hand to help you find a loan program that fits both your financial situation and your home buying needs. Be sure you understand the current rates, what rates are doing (moving up or down) on a week to week basis (this affects affordability) and the overall costs of the loan involved. A great mortgage broker and Realtor will give you an up front good faith estimate of your closing costs. (what it will really cost you at the point of sale.)
What's the best loan for you? That depends on a number of factors, including:
How long youâ€™ll stay in the home;
How much money youâ€™ll put down;
How youâ€™ll finance the closing costs.
3. Keep these tips in mind as you go through the process:
Establish good credit.
Raise your credit score
Save for a down payment & closing costs.
Keep detailed records of money spent and debts repaid.
Develop a financial plan.
Maintain a working relationship with a Realtor Buyer's Agent.
Learn your area's market values.
I'd like to offer you several resources to explore:
On my website, you'll find guides and tools expressly for the first time homebuyer.
guide to help buyers with the process.
is a directory of tools to help first time buyers, including q&a and calculators.
is a list of Frequently Asked Questions regarding the mortgage process, which I know you will find useful.
are financial calculators that will give you a snapshot of your situation, prior to meeting your mortgage broker.
If you need more resources, let me know, and I will be happy to point you in the right direction. After you've done your research, please call me for a referral of mortgage brokers in your area. In addition, I specialize as a first time Buyer's Agent, and I've been a Realtor in Los Angeles for 33 years. I'd be happy to assist you in any way that I can. Best of luck.
Certified Short Sale Professional
Coldwell Banker Brentwood West
11999 San Vicente Blvd. Suite 100
Los Angeles, CA 90049
Blogging at: http://TheBremnerGroup.com/blog