Saving for Your Down Payment in Los Angeles

Saving for Your Down PaymentIf buying a home in Los Angeles is in your future, one of the realities you’ll need to face is the need to save for a down payment. Depending on the type of mortgage you qualify for, you’ll need anywhere from three to upwards of 20 percent of the purchase price in order to close. While that may seem like a lot of money to come up with in one lump sum, it can be done with some forethought, planning and discipline.

Here’s some of our best advice for saving money for your down payment.

Determine what you can afford

One of the first steps you need to take when you’re house shopping in Los Angeles is to get pre-qualified for a mortgage. Not only will this make you more attractive to sellers, it will inform you how large a loan you can reasonably expect to carry. That, in turn, will tell you how much you need to save for your down payment. Depending on what percentage you’d like to put forward as a down payment, your mortgage lender can then calculate your target home price. Remember, the larger the down payment you can manage, the less you will need to pay each month for private mortgage insurance (PMI) and the better the interest rate will be for your loan, so it’s best to save as much as possible.

Find out if you qualify for a mortgage with a lower down payment

There are certain types of mortgages that allow buyers to put down a significantly lower down payment than a conventional loan, including an FHA loan, a VA loan and a USDA loan. Each loan type has its own set of qualifications, and these may be a good choice for you if you fit the criteria.

Decide on a timeframe

You probably won’t be able to save enough money overnight, so it’s a good idea to give yourself a timeframe for saving this money. If you’d like to begin your home search in earnest in three years, take the amount you need to save and divide it by the number of months you’ve given yourself to determine how much you need sock away each month.

Open a savings account

If you don’t already have a savings account where you do your banking, now is the time to open one. Most banks will allow you to set aside a fixed amount each month to be transferred from your checking to your savings, and automating the process will help keep you on track. Consider depositing one-time payments, like tax refunds, directly into your saving accounts, to reach your goal more quickly.

Check your credit

Your credit can help you score a better deal on your interest rate – as well as more breathing room with your down payment – as long as your score is good. As soon as you’ve decided to start saving, check your credit report to make sure it’s accurate. Sometimes credit reports contain inaccurate information that can hurt you, so give yourself plenty of time to clean up your report and your credit score.

Brought to you by Jerry & Rachel Hsieh

SHARE OR SUBSCRIBE TO THIS POST

What Others Are Saying

About the Author

Saving for Your Down Payment in Los Angeles

Jerry and Rachel Hsieh

In the past 13 years in real estate and at the age of 38, Jerry has had the good fortune of experiencing all of this at some point and has established himself as one of the premiere AWARD WINNING Realtors in the industry. Jerry began his career at Coldwell Banker with incredible heat: He was named the top “rookie” agent his inaugural year with over $4.5 million dollars listed and/or sold (Most 1st year agents don’t complete any transactions). Since then, his real estate career has been non-stop and he has quickly become the realtor that other young realtors talks about. In 2010, in a down market, Jerry and Rachel sold 24 homes within a 1 mile radius of the Pico/Fairfax area. They have sold over 50 homes in the Picfair Area in the past 4 years, more than any other realtor. From 2011 until now, Jerry and Rachel’s Team has grown, as has Jerry’s experience and expertise.