There is an understanding that to buy a house in LA can become quite challenging, something that many would have to agree with once planning their home-purchase in the area. They would also need to understand the budget would have to reach around 5000,000$ to get the home they would want to purchase. For many, they would be able to save about 25,000$ if they plan to apply for home loans, which really won’t hit a 20% down mark in most cases.
Other financial factors should be considered. Doubling on rent payments for those that rented the house along with its mortgage. Then there are the fees on utilities, which can be hefty depending on the house and its space. For many buyers, these are things that need to be taken into consideration when purchasing and handling their budget.
According to Leighann Miko, a real estate agent in the area, this isn’t the common behavior for many home buyers (Buying A House in LA), especially from the Millennial generation. Compared to the more older buyers, the difference between the two is that there is a means of a disconnection between the reality of the costs and the assumed costs that many lean themselves towards.
Miko also says that the expenses themselves would be rather insignificant when the utility fees double or even sometimes triple the original amount to pay. Another thing that many Millennial home-buyers should take note is that by saving in down payments could make the difference, as Miko suggests. Though Millennials can earn decent pay in their occupations and can hold their mortgages. However, with high prices, saving up for down payments can be quite difficult for them.
How to Save
The reality is that in order to save, it all depends on how the money is being placed into other factors. That all really depends for each buyer, but it should come down to asking if the money being spent at the moment truly needed or can it be saved for the down payments and rent of the house (if the house is rented).
In some cases, depending on how they saved up with their other expenses, they can save up to 5% of down payments. Other cases, the savings aren’t as efficient and some would request housing loans from the FHA, or Federal Housing Authority to help with their housing expenses. The minimum percentage for the request would be 3.5%. However, not everyone can reach 20% in their down payments and given the status of the market today, it doesn’t really matter.
10% is enough for today’s standards in the market
Many real estate professionals also take note that as long as there are any fiscal responsibilities for the buyer in their homes and are perfectly comfortable with the PMI (private mortgage insurance), then that 3% isn’t too effective in their overall budgeting. Of course, it all depends on the buyer and their needs.
The 30% rule also holds to today when it comes to the monthly income towards the monthly mortgage payments. It’s something that many homeowners seem to accept in the long run of things.
Miko also agrees to that principle. She claims that it all depends on the situation of the homeowner/buyer. Would they be living in a debt-free lifestyle, or would need to have a few extra loans in order to the house they want? However, she still sees many buyers getting approved for mortgages that seem to be well above their normal spending habits/budgets.
Gian Ceretto from Home Services Lending also feels the same way about this issue. He claims that the buyers should stay well within the regions of their normal spending lifestyles and budgeting along with the other payments that are necessary for the home. Either that or come to a compromise to ensure they still have enough to make the payments.
At the end of the day, the buyer needs to understand where they are putting their money. Are they willing to spend enough and save little for that home they’ve been wanting to buy? Or make decisions to keep the house they have and stay within their budgets? It all comes down to them and their decision-making skills, along with expertise from the real estate agencies from their area.
Rana Khanjani, MBA
San Fernando Valley Iranian-American Real Estate Agent
Providing Services in English and Farsi
Address: 22020 Clarendon St. 200, Woodland Hills, CA 91367