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Mortgage Rules To Follow When Buying A Home In Northeast Los Angeles

By Author: Samantha Turkle
Total Articles: 79

Buying a home in Northeast LA neighborhoods like Highland Park, Eagle Rock and Glassell Park is exciting and can be a great investment providing you get the right home loan.

To become a homebuyer or real estate investor, it’s vital to face the facts. Homes are expensive. This is especially true in areas of Los Angeles where the market is “hot”. We’re not talking about places near the ocean. Even older neighborhoods in Northeast LA can easily put a homebuyer back a half million dollars. Few have that sort of cash lying around and most require a mortgage.

Homes in Glassell Park, one of LA’s oldest neighborhoods, were affordable just a few years ago before the Northeast LA real estate rush. Today, like Highland Park real estate, even fixer uppers aren’t so affordable, making the foray into real estate mortgages a must.

Mortgages are essential tools for any person interested in buying a property that does not have the required moneys to complete the transaction. Mortgages are often the most expensive loans that people apply for in their lives. Understanding the basic rules of mortgages and how they work is imperative in order to pay off the loan as quickly and painlessly as possible.

Knowing what’s in a mortgage.

A mortgage is a loan to buy a property or a home. A lender only approves mortgages if he or she is certain that the buyer will be able to make payments in a timely manner. Lenders look at your income, credit score and outstanding debt to determine if you are financially able to support the mortgage.

Think hard about your fixed costs.

An important fixture in determining your mortgage limit is putting together a strong list of fixed costs. This goes beyond estimated grocery bills and gas for your car. Consider the little expenses like coffee Mondays, sushi Fridays, and clubbing on the weekends. Those expenses may not be “necessary”, but realistically you will become very unhappy if you’re mortgage cuts in too deep into your recreational activities.

Consider a PITH cushion

PITH is an acronym which represents the sum of the required housing costs for your given property. Here is the breakdown:

P= Principle you must pay each month for your mortgage

I= Interest each month on your mortgage payments

T= Property taxes

H= Bills, such as heating bills

If the totality of this amount is less than 32% of your gross monthly income, you should have the support to afford your mortgage.

Choose a mortgage within your budget

There are a series of free mortgage affordability calculators available online that will assist you in painting a clear picture of the maximum mortgage amount you can borrow. Once you have established the PITH, you need to look at your entire monthly debt fee per month. This includes car payments, credit card debts, student loans and whatever else you are paying off. In addition to the PITH your entire monthly debt load should not surpass 40% of your gross monthly income to sustain a comfortable lifestyle.

Repaying your mortgage

There are several factors you need to consider about your mortgage repayment. Look at the interest rate to determine the frequency and amount of payments you will make. You will also need to choose your amortization period. This the time it will take to pay back the mortgage in full. It can range between 15-25 years, but the longer the time the more interest will accrue.

Choosing the right interest rate

Interest rates for mortgages can vary from fixed to variable interest.

Fixed: The interest rate for your loan will not change for the length of the mortgage under any circumstance. Fixed interest rates are usually a bit higher, but they are guaranteed to stay at that rate.

Variable: The interest rate will fluctuate depending on the health of the market. Variable interest is a gamble, you may have low interest rates for the term of your mortgage, but if the market crashes you will have a price to pay.

Owning your own home and property - especially homes in Pasadena and Eagle Rock, CA - is a luxury capable of providing the owner with privacy and freedom. Even if the process to obtain the home is daunting, there are helpful resources like mortgage brokers and financial advisors to ease the complexity of the process.

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