1) Figure our your Price Range with the help of our Mortgage Calculator
What Would My Monthly Payment Be?
For an estimate of your monthly payment, use the calculator below. Please use the chart below the calculator to determine the maximum loan amount for your property value.
The maximum amount that a mortgagor can lend on a property is a fixed percentage of the property value called the loan-to-value. Please see the chart below for standard loan-to-value calculations. Please bear in mind that these calculations are very general. Today, more lenders than not have programs that go to LTV's as high as 100%.
||Maximum Loan Amount*
|$50,000 - $1,250,000
|$1,250,000 - $2,000,000
|$2,000,000 and above
For example, on a purchase price of $1,600,000 a mortgagor based on the above LTV may lend up
to 75% or $1,200,000.*
* The amount a mortgagor can lend is based upon your
individual financial situation. This may be more or less than the amounts indicated
in this table.
How much can I afford?
For an estimate of the mortgage debt my income can carry, use the calculator below.
Several factors determine the loan amount a borrower may qualify for,
including income, debt and credit history. The calculator above makes
assumptions about debt. It assumes that your monthly obligation for all
the mortgage debt is 28% of your gross income. It allows an additional
five percent for taxes, insurance, condo or co-op maintenance fees, and
another three percent to cover all other monthly credit obligations.
Based on these assumptions, the calculator estimates the loan amount
you may qualify for, based on your income. This is only an estimate. It
does not consider many factors you may wish to consider before obtaining a
2) How to Compare Lenders
Often times people are confused when they get two different quotes from different lenders. The reason for this is because they are not comparing apples to apples. Below is an example of:
Loan Amount: $500,000
Interest Rate: 6.5%
Monthly Payment: $3,160
Loan Program: 5/1 ARM (Loan interest rate is fixed for 5 years and then the interest rates adjusts 1 time per year)
Points Charged: 1 (This equals 1 percent of the loan amount, or in this case $5000)
Miscellaneous closing costs: $1,200
Pre Payment Penalty: 3 year Hard
Loan Amount: $500,000
Interest Rate: 6.625%
Monthly Payment: $3,201
Loan Program: 10/1 ARM (Loan interest rate is fixed for 10 years and then the interest rates adjusts 1 time per year)
Points Charged: 0
Miscellaneous closing costs: $900
Pre Payment Penalty: None
For many people the first thing they will look at is the interest rate, lender A has a better interest rate and is therefore the better choice. However, when looking at the other factors we will truly compare the two by each category:
Interest Rate: Lender A, has the lower interest rate, but the loan is only fixed for 5 years and this is probably the reason that lender A has the lower rate. The general rule is, the longer the amount of time the loan is fixed, the higher the interest rate. The reason the bank does this is because if they are offering you a fixed rate for 30 years, they will need to get a slight premium because they will not have an opportunity to earn any more interest on this money for 30 years. If you are applying for a 1 year fixed, they will give you the lowest initial rate because in 1 year this loan will adjust to market and they will not be exposed for very long to interest rate fluctuations. So for increased security in your mortgage, you may pay have a slightly higher interest rate, but you know that it will not change. In this case, Lender B has an interest rate of only 1/8th (.125%) higher that Lender A, but the loan is fixed for 5 years longer. Lender B is the winner.
Monthly Payment: This is directly tied to the interest rate. For $41/month, you are having your loan secure for an extra 5 years. We feel this is a good value (If you know that your job will be relocating in 3 years, then we would recommend Lender A. However, often times this is an unknown). Lender B is the winner.
Loan Program: Lender B offers much more security, based on the fact that the loan will not adjust for 10 years. Like we stated above, if you know that your job or some other factor will lead you to only be in this home for 3-4 years, then it would make more sense to go with Lender A as there would be no need to pay a premium for the loan to be fixed after you will have moved. Lender B is the winner.
Points Charged: Many people do not even to know to ask about this, how many points am I being charged? They only to find this out at closing when it is too late. Lender A is charging 1 point (1 percentage point of the loan) which is equal to $5000, while Lender B is charging 0 points, a charge of $0. This is a direct immediate savings of $5000. Lender B is the winner.
Miscellaneous Closing Costs: Lender A-$1,200 Lender B- $900. Pretty clear, just make sure you ask what are the closing costs so that you are informed. Lender B is the winner.
Pre Payment Penalty: This is one of the most overlooked things when applying for a loan from two different lenders. Many people ask, what is a pre payment penalty? This is when the lender charges you a fee for paying the loan off prior to the end of this penalty (selling or refinancing). There are two different types, a Hard pre-payment penalty and a soft pre-payment penalty. A hard pre-payment penalty is when the lender charges you whether you sell or refinance the property prior to the expiration of it. A soft pre-penalty is you are charged only if you refinance the property but not if you sell it. The reason for this is that the bank does not want you to give another bank your business just because rates came down a ¼ of a percent. A pre-payment penalty is usually equal to 6 months worth of interest payments. In this case that would equal $16,250($3160 is the monthly payment, but only $2708 of that is interest, multiplied by 6 months). This is far from insignificant if you have to move or refinance for some reason. If you have a great loan and you truly feel that you will not need to refinance, then a pre-payment penalty is probably not a bad option for you, as you may get a slightly lower rate for taking it. Everything is tied to risk for the bank, and if you choose to take the pre-payment penalty, the bank is virtually assured that they will get interest payments for at least that long. If all things are equal, not having one is much better. In this case, not having the pre-payment penalty gives you much more flexibility, which is always good thing. Lender B is the winner.
Conclusion: This situation may have been slightly extreme for illustration purposes, but now you should have a good idea of what to look for when shopping two lenders. To the untrained eye, Lender A may have initially seemed like the better choice, however, after looking deeper into it, Lender B clearly outperformed Lender A as a whole. We cannot guarantee that we will always have the best program, but most of the time we will. If you tell us what your lender is offering you, we will do our best to beat that and if we cannot we will be the first to tell you to go with them. It is about YOU and what is best for YOU, and we always keep that in mind.
3) Getting Pre-approved
Becoming Pre-Approved is the very first step in the home buying process. This will tell you how much the bank will lend you for your purchase or refinance, and at what interest rate. It also gives you an opportunity to analyze your credit report for any discrepancies. Should you find any discrepancies, it is better to correct them before you purchase a property so that you get the optimum interest rate available to you. After getting Pre-Approved we will provide you with a Pre-Approval Certificate which you will present with your offers so that sellers know you have the ability to get financing. Getting Pre-Approved makes the home buying process simple:
Getting Pre-Approved is very simple and can be done online in just a few minutes.
- Apply for your Pre-Approval
- Receive your “Pre-Approval Certificate”
- Make offers
- Work with your PERSONAL loan consultant to close transaction.
4) Find your Home/Property
Use 310 Properties expertise to find the property you are looking for in Los Angeles. Specialising on the west side of LA. Feel free to browse our pages dedicated to profiles of areas in West LA we specialize in:
or Search the MLS
5) Make Offers
Making offers on property is one of the most exciting things to do and also one of the most fear for first time home buyers. Some of the common reasons for this are: the buyer must sign the document, they feel an offer means they must buy the property, they are just scared to take the next step.
Lets address these concerns:
Buyer must sign:-Yes, of course you must sign the document, but this is only so that the Seller knows you are serious. If nobody signed offers, agents would just call other agents and say my client will offer you X, what do you think? There would be no control and the price being asked by the seller would virtually mean nothing. Assume they are asking $300,000, but since it is just a phone call away you call and say, will they take $100,000, no, ok how about $150,000? This would go on forever until they got to the bottom price the seller would be willing to accept. The fact that paperwork is involved keeps things a little more sane and keeps the people who are not serious out of the picture.
Offer means I must buy- This is the probably the most common because the fear really lies in, “what if they accept?” First of all, an offer does not mean that you must buy the property, it is only an offer. If they do accept, you still have your inspection period where you can walk away from the property for any reason you like at NO COST TO YOU. You can simply say, “I do not like the way the grass grows on the front lawn Mr. Seller, so I am going to pass. Thank you very much” This is the part that many people do not realize when making an offer. You can walk away at any point during your inspection period, which is typically 10 days but could be as little as 7 or as much as 17 days.
6) Close the Deal
Once we've guided you throught the first 5 steps you will be well prepared to buy your new property and home. If you have any questions or further information on how we can help you through the process please contact us.