Buying Your First Home in Los Angeles

Are you ready to make the potentially biggest financial leap of your life? Buying your first home can be daunting, but there is no need to fear. Below are the key steps you need to consider as well as some tips and recommendations.

Decide whether now is a good time FOR YOU

On one hand, many first time home buyers have a number of hesitations that prevent them from taking the first steps, while on the other hand, there are folks who initiate the process when they are definitely not ready. The point here has nothing to do with timing the market! There is always a good deal in any market – this about where you are financially, what financing you’d like to pursue, and whether you’ve taken the steps to be prepared. To assess whether YOU are ready, peruse the many calculators on the internet to conclude objectively potential outcomes of you buying now. One such tool can be found on Zillow which calculates whether it makes sense for you to rent or buy:

Rent vs Buy Calculator: https://www.zillow.com/rent-vs-buy-calculator/

Understand the Different Financing Options

As a first time home buyer in Los Angeles, below are some of the financing options – keep in mind though that they all have restrictions, pros and cons. This is not an exhaustive list and your best bet is to talk to a loan officer in your area.

Home Buying Assistance Programs

Program	Description & Links
CALHFA	https://www.calhfa.ca.gov/
GSFA	http://www.gsfahome.org/
HFA – 203k	https://www.hud.gov/program_offices/housing/sfh/203k/203k–df
USDA	https://www.rd.usda.gov/
VA	https://www.veteransunited.com/va-loans/
NACA	https://www.naca.com/

A Sample of Alternative Financing Programs

Conventional Loans

Fixed-rate Loan
Adjustable-rate mortgage (ARM)
Bridge Loan

Conventional vs HFA

Considerations	Conventional Loans	FHA Loans
credit score	Minimum 620; the higher the better.	Typically as low as 580; not as important
Minimum down payment	As low as 3 percent, but 5 to 20 percent is typical	As low as 3.5 percent
Mortgage insurance	Monthly payments are required if you have a down payment of less than 20 percent, but generally, the insurance can be canceled when your loan-to-value ratio reaches 80 percent.	Upfront and monthly payments, sometimes for the duration of the mortgage term, are required. Thought some owners refinance with a different loan later on and get rid of the PMI.

A Comparison of Conventional and Government-Backed Loans

Baseline – Understand Your Market!

Most places won’t share this tip, but it is a very critical step: baseline-ing. What is baseline-ing? It’s understanding what you can get for a budget you’ll set next. This is not going out to by, but instead for the purposes of seeing a few houses, meeting a few realtors, attending a few real estate events, so you understand the value of homes and what’s actually important to YOU. After seeing 10 – 20 homes, you may be ready for the next step…

Now that you have toured LA and have a better understanding of the good and very very bad areas, you should be now well primed to spot value. For me, it took a few months and lots of driving around to know what areas makes sense.

Get Pre-Approval

If you have been hesitating on moving forward, focus on getting pre-approval. Pre-approval is great because it gives you a deadline to complete the housing search (within 3 months, typically – though this can also be extended). With pre-approval, you won’t waste your or others time during the search; your agent, seller, and most importantly, YOU will know what you can / cannot afford. The temporary ~ 5 point drop in your credit is worth it!

Finding the Perfect Home

Research hard and find a great realtor (if you are not already an agent). Below are some websites:

https://www.realtor.com/realestateagents
Ask around! there is nothing like a personal recommendation from someone who closed with an agent. Don’t forget to ask how what services the agent provided. Not all agents are the same!!!!!
Talk to agents at open houses, sign nothing until you are certain!
Attend meetup events and local workshops to find agents with relevant experience for your area.
Know your agent’s availability before you commit!

Now that you are pre-approved, at this point you should be fully aware of the best tools available to make you search easier.

Tools to Use

Your realitor’s Multiple Listing Service
https://www.redfin.com/
https://www.zillow.com/

IF you are looking for a multi unit in LA, get ready for the big leagues. One of our members has seen over 100 houses and is on his 15th offer for 4 units! He finally received 2 offers the same day and is know going through escrow 🙂 Persistence is key.