Are you planning on buying a home in Hollywood Hills? You must have already started looking at the mortgage options available to you. Even though a mortgage may feel like a short cut to acquiring your own house, it is also a huge financial commitment that you must be financially able to fulfill. Continue reading our how-to guide on how you can avoid paying too much for your mortgage.
Phase 1: Start with Calculating Your Affordability
The real estate market in Hollywood Hills is incredibly vast. From beautifully crafted townhouses to lavish luxury homes, you will be tempted to buy every house you step into. To save yourself from bidding for a property that you can’t afford to pay for, you should start by considering how much your finances allow you to invest in a home. A few important things to consider are:
- Monthly Income – When you approach a lender, you will almost always be required to demonstrate that your monthly housing costs don’t exceed your income.
- Unpaid Debts – The amount of mortgage that you will be given will depend on whether you have any remaining debt payments. So, in case you do, the monthly debt payments and your mortgage payments may be restricted to a certain percentage of your overall income.
- Down Payment – A mortgage lending institution prefers a certain percentage of down payments before approving a conventional loan. For most homebuyers, this is a significant factor that determines if they will be able to afford the property or not.
Phase 2: Look for Down Payment Options
The amount of money you’ve budgeted for down payment largely determines the kind of mortgage you qualify for and how much you’re allowed to borrow for a home. A small down payment seems like an interesting option when buying a home in Hollywood Hills, but don’t forget that the large amount you borrow in the mortgage, the more interest you will have to pay. Therefore, a large amount of down payment can also mean that you won’t have to worry too much about financing later.
Many people overlook the options for down payments when deciding on a mortgage, which is why they end up paying more in interest than they expected to. A couple of ways to escape this are:
- Consider loan options with lower down payments
- Look for assistance programs that offer grants or low-interest loans for the down payment
- Eligible veterans should apply for a Veterans Administration loan
- Look at the qualification criteria for the Federal Housing Administration (FHA) loans
- Hire a real estate expert who could give you credible advice on which type of loan to apply
Phase 3: Find the Right Home in Hollywood Hills
By this phase, you will know how much money you have allocated to your buying budget and the amount you are willing to pay for down payments. If you’re interested in minimizing the cost that goes into mortgage payments, you must keep in mind that you may have to compromise on your wants. A seemingly affordable house with too many amenities that you don’t need can be a burden on your finances. Therefore, when choosing a home, think about:
- Your family size
- The time it will take to commute to and from your workplace or children’s school
- Your needs and wants – what are the things that you prioritize?
- The type of housing option that will best fit your lifestyle
Pezzini Luxury Homes can help you find Hollywood Hills house right for your needs. But be aware that the kind of neighborhood or housing option you choose will greatly impact the amount you pay in mortgage payments. So decide wisely!
Phase 4: Compare the Mortgage Options
Once you are aware of which mortgage options you qualify for, try to compare the prospective options with conventional loans. In other words, it is a good idea to shop around for a mortgage and sign up for one that offers the best deal in the neighborhood. The process itself is very time and energy-consuming, but it’s worth it. Good real estate agents are usually a great help because they can connect you to their networks in reliable banks. So be clear about your needs and concerns and negotiate where you can.
Phase 5: Get Pre-Qualified & Lock the Deal
In this final phase, you finalize your loan lender and get a pre-qualification that proves to the home seller that you are qualified to buy their property. The pre-qualification will give you an edge over the other buyers and take you closer to buying your dream home.