How much money do I need saved to buy a house in Los Angeles??

Purchasing a home in Los Angeles isn’t easy.  Assuming you’re not made of money and purchasing a home all cash (meaning you’re planning to take on a mortgage) then you’ll need cash in the bank for the following things to purchase a home:

1. Inspection Fees (general home inspection, sewer inspection, termite inspection, etc.)
   1. Ranges from $500-$1,000
2. Down Payment (this varies by loan program, typically between 3.5-20%)
3. Homeowner’s Insurance ($500-$1,000)
4. Closing Costs (Escrow, Title, Notary Fees, etc.)
   1. Usually about 1% of the purchase price
5. Loan Costs (Origination, Appraisal, Admin. Fee, Points, etc.)
   1. Usually about 1/2 of 1% of the purchase price
6. Property Taxes (your lender will require your property taxes to be prepaid through the next payment period)
7. Reserves (cash left over AFTER closing, typically 3-6 months’ worth of housing payments)

Because there is a wide range of home buyer scenarios it can vary greatly, but let’s look at the figures assuming a $1,000,000 home purchase with the standard conventional 20% down (remember there are programs for as little as 3.5%, don’t be discouraged). 

Purchase Price:                                               $1,000,000

Down Payment                                               $200,000 (20% down conventional)

Inspection Fees:                                              $1,000

Homeowner’s Insurance:                               $1,000

Closing Costs:                                                  $10,000

Loan Costs:                                                      $5,000

Property Taxes:                                               $6,500

Total Cash to Contribute at Closing              $223,500

Reserves Required:                                        $30,000 (6 months)

Total Cash Required Available                      $253,500

The bottom line is you need to get pre-approved by a lender BEFORE you start your home search.  You may THINK you know your budget, but lenders have their own underwriting criteria and are the final say on what can and can’t be done (which is oftentimes more conservative than you think).  Unless you’ve had your financial statements reviewed by a lender, you’re not truly sure what you can afford.

Annnnnd that’s it! It can be a bit complicated, but that’s why we’re here! With our knowledge of the lending process, we can help be your real estate advisor through the buying and selling process and guide you each step of the way.

Give us a call!

call now  aduplexla.com