First time Home Buyer in US. Looking for some help and tips please(Los Angeles area)

[Dean E.]

Hey Guys,

Myself and my wife are hoping to buy our first home this year. Actually we have been aiming to buy the house we have been renting since 2010. The landlord wants to sell and we wanted to buy. But at this moment is a little out of our range. The house is in the 91401 area and he wants what he owes the bank which is 580k. Its a 4 bed 3 bath a little under 2000 sq ft.

Its a nice home needs some work but not much. Up until last night we hadn't looked at much else because we where pretty heart-set on this house. But I think if we are both honest its mostly out of convenience and the fact I built a studio within the house and put a lot of effort into that.

It was tough getting an approval too even with a speculated 20% down (which we are aiming for because monthly payments at 10% were ridiculous)

My wife had to get her parents aunt and sister to co sign for the approval, as I am from Europe I don't yet have a solid credit line here. She earns a good living and has excellent credit but since she incorporated herself 2 years ago, the numbers worked against her when trying to get an approval.

So that brings me to my first question. Even at 20% down, estimated monthly payments are still around 3k a month. Which is still quite high, I am looking for some tips if any to help bring monthly payment down etc. (We are very new to this whole process)

My second question is if there is any tips or tricks for getting around the down-payment. While im optimistic of acquiring a 20% down payment it is still quite difficult. I know there were some tricks with the paperwork in Europe for bypassing down payments etc I just down know how well they would work here and would probably end up with higher monthly payments that way anyways.

My last question: Last night we looked at some buy off the plan options just outside LA and seen some amazing homes for over 100k cheaper. Unfortunately the area was Pacoima and the crime rate there is just crazy according to a little research I did. So do you guys know of any other areas just outside LA similar distance like Pacoima but a nicer area to live and raise a family. Preferred price range would be between $400-500k, in around 2k sq ft with 4-5 beds.

Also what companies are rated well and reccomended for buying homes off the plans. So far we have been looking at Richmond Homes, KB Homes and Toll Brothers. Can you guys let us know of other similar companies please. We like the energy efficient options too, that would be a bonus.

I truly appreciate any tips and input.

Thank you

D

[David Sanchez]

Hey @Dean E. ,

So here's my take on what you said:

Although it would be awesome to buy the place you currently rent, it's almost always not worth it. You have emotion in the game already. I'm in Northern California so I feel your pain as far as costs go compared to the rest of the nation.

What I really don't understand is why you are adamant (don't get me wrong, plenty of people are!) of putting 20% down. You said the monthly payments are too high otherwise.. But then I'd say you're probably not in the price range you should be, or are looking at this the wrong way (no offense).

If you have closet to 116k to put as a 20% down payment, then surely you can understand buying a place at that value with as little as 3.5% down via FHA loan ($20.3k), and leaving the extra $95k plus in your bank account or wherever it happens to currently reside. That $95k will surely help you make the extra few hundred dollar payment for a longtime coming. Then, when your property increases in value or you decide that your savings have grown and you are ready to refi with 20% down on the appraised value, you can get rid of the MI (Mortgage Insurance) and get into a conventional 30 year if that's what you want.

There ARE other options for you to look at, think outside the box and ask here, I would NOT tie up 20% if I were in your shoes. Also, I don't know that I would pay $580k for your current house unless it was worth a decent amount more than that. Just my 2 cents, hopefully at least one thing I said strikes a nerve for you!

Good luck with this and any future investment Dean!

-David