Top five first time home buyer questions in Los Angeles, CA
Over the years, these were the top five first time home buyer questions, I have been asked in the greater Los Angeles area. Now, in no specific order, let me list them and then address each of them:
- How safe is the neighborhood?
- What will the annual taxes be on this home?
- How much will I have to pay per month for the mortgage?
- What is the interest rate going to be on my loan?
- How much will my home be worth in seven years?
Clearly these questions sound simple, but they are not that easy to answer in a sentence or two. Most first-time home buyers need, what I consider additional patience and even some hand holding. The extra kindness and caring will make the purchasing process so much smoother.
How Safe is the neighborhood? This is not a loaded question; it is a legitimate concern. The issue is it is a subjective matter. Different people have varied tolerance to what they perceive as safe vs. unsafe. I always advise my buyers to drive by the area in the evening, weekends as well as weekdays to determine their comfort level. I also suggest checking with the local police department as to what the crime statistics are. Interestingly this is not just asked by Relocation Clients. Keep in mind Los Angeles consists of about sixty square miles of area and often first-time home buyers leave the comfort zone of where they were renting to a different area to purchase, because of affordability reasons.
What will the annual taxes be on this home? Well this depends on where the property is located, it makes a difference if it is in Beverly Hills, Culver City or Los Angeles to name a few areas. Clearly a safe number without looking at the actual location is around 1-1.25% of the purchase price. Thanks to Proposition 13, our tax obligation is determined by the purchase price. There after minor tax increases are permitted based on inflation. This is probably the easiest question to answer from all five.
How much will I have to pay per month for the mortgage? This question I prefer the lender to answer. Clearly deferring, because it all depends on a variety of factors. One factor, which has the largest influence on this is, how much will the down payment is the mortgage amount itself. It has a huge impact on the size of the monthly payment. Other factors include what type of loan it is and the list goes on and on. Not wanting to forget the interest rate influences this amount as well.
What is the interest rate going to be on my loan? This question also requires a more complex answer. The short answer is it depends on your credit rating, coupled with the income you can generate. Also, it depends how large are your outstanding loan balances, to name a few. Again I defer the buyers to the Mortgage lender to get a better answer.
How much will my home be worth in seven years? I always joke yes I was born in Hungary, but I am not a Gypsy and I do not have a Chrystal Ball as to what your home is going to be worth in seven years. One thing I can share with you is my father bought his home for $41,500 and sold the house in the bottom of the market for $108,000. We bought our home when the market was increasing and now it is worth 40% more than five years ago…. With that said we are not planning on selling instead we are enjoying living in our home and not having to pay the landlord.
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