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Buying a house in LA? Try these money-saving tips
The price of homes continues to rise in Los Angeles, as buyers driven by low-interest rates and a desire for more space compete for properties throughout the city. After a slight dip after March, prices rebounded in June of last year and have continued to climb in 2021. These prices pushed LA locals to seek out ways to save money in the home buying process.
Purchasing a home in Los Angeles is one of the most expensive transactions you will make, so the team at Prevu Real Estate compiled a list of money-saving tips to help buyers in this hot market.
Hire a local expert
Experienced buyers optimistically think they can save themselves money by representing themselves in the transaction process.
But LA buyers are better off partnering with a licensed buyer's broker to guide them through the finer points of the transaction. An experienced agent uses their local experience and knowledge of real estate to help refine a buyer's search through comparative estimates.
Agents also quarterback the transaction during negotiations, guiding buyers from contract to closing. Buyers should interview a handful of local agents and ensure they find the right fit for their search.
Shop for the best mortgage interest rate
Once buyers amass funds for a down payment, they can kick off their search. The first step is to find a reputable lender to finance their home buying dreams.
Examine your finances and determine what type of loan financing fits your long-term goals. Do you have a sizable down payment nest egg, or will you need the funds to fix up the property? Most first-time buyers end up partnering with the first lender they connect with and miss out on a great monthly interest rate.
Los Angeles buyers can save thousands of dollars in interest payments by interviewing multiple lenders and get pre-approved by those offering good terms. Having a pre-approval letter means you can finance your offer and saves time in the deal process.
Save thousands with a commission rebate
Securing a great interest rate goes a long way to save money. Still, buyers can increase their savings further with a commission rebate.
Legal in 40 states, including California, commission rebates allow brokers to provide clients with a percentage of their commission fee once a deal closes. Depending on the purchase price, buyers working with Prevu Real Estate can bring home up to two-thirds of the broker commission fee through the Smart Buyer Rebate.
Buyers can make more substantial offers or furnish their homes with the savings generated through these rebates.
Use down payments to your advantage
Many first-time buyers have to save for years to generate the funds needed for a down payment in LA. Depending on the financing used, some buyers opt to put down as little upfront as possible.
But this strategy leaves new homeowners with years of large monthly payments. By putting more money upfront into a down payment, buyers reduce the size of their monthly payment. Depending on how much LA buyers put down at closing, lenders may even lower the interest rates on the loan.
By saving money with an attractive mortgage rate, buyers can utilize that portion of their monthly budget to pay down the mortgage faster or utilize the extra disposable income for upgrades.
Improve your credit score
Mortgage brokers base a buyer's ability to borrow on credit scores, assets held, W-2s, and other financial documents.
A buyer's credit score dictates creditworthiness to lenders, and keeping your credit history clean is a must for aspiring LA homebuyers. So as you save up for your dream home in your favorite neighborhood, make sure not to create any new lines of credit like purchasing a car or running up credit card debt with fancy vacations.