Get the Lowest Monthly Payment when Purchasing a Home in Southern California

Are you trying to get the lowest payments possible when buying a home in Southern California? Well when you go to the bank and you get pre-qualified they just look at your situation today and nothing else. Well the truth is there could be some tweaks you can make to save you money every single month on your monthly payments. The big Banks, they really don't tell you about this either because they don't know how to make these changes or they just don't care because they have a sheer volume they have, they can care less if you do along with them or not. Now I'm going to show you exactly how to get the lowest monthly payments when purchasing a home in the Southern California area, let's go. 

First off, my name is Matthew Silva. I'm a mortgage broker with Mark 1 Mortgage. I'm a wealth advisor who helps guide people into home ownership and then transition into investing with long-term rentals that will help pay for the retirement and create a legacy for generations to come. My clients include lenders, they include Banks, they include attorneys, investors and regular people in Southern California and hopefully one day you'll include you too. So let's get started.

To get the lowest payments possible, you're going to want to understand the banks and what they're looking for and what they want to see.  

And the first mistake most people make is thinking, “Oh, I've got great credit. I can buy anything I want,” – wrong. So, the banks don't just look at your credit. They don't just look at your job and your income and your down payment. They look at all three factors and from there, that's how they give you a better interest rate and essentially what it is, it's a risk factor. If you have bad credit, you don't have a lot of money down, you don't have a solid job. Well, you're more of a risk than somebody with great credit, more down payment etc, etc. 

So let's get into the very first thing which is your credit. Now there are always tweaks that you can do to improve your credit. Every single credit report I see always has one or two things that we can do to improve it. If your credit is in the 800s, don't even need to bother focusing on that but anything shy of that there's always room for improvement. Now if you’re very interested in working on your credit, you're going to want to check out my video: How to boost your credit by 100 points. 

The next thing they look at is your income. If you're a W-2 wage earner, your taxes are nice and simple, you don't have too many write-offs, the bank's love that. Versus a self-employed person such as myself who's got to work a little bit harder to get pre-approved for a loan. 

If you're interested and you're self-employed, you're definitely going to want to check out the video, How to purchase a home when you're self-employed.

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Now the third factor they look at is your down payment. The more money you have for a down, the lower the payment you're going to have, right? Well, a lot of people don't know that the banks in Southern California prefer 20% down. One of the things you need to understand is that anything less than 20% down is going to have what's called PMI Insurance (Primary Mortgage Insurance). This is an insurance for high-risk loans for the banks, not for you. So it really protects them against you going into foreclosure and that rate on the PMI in certain loans are set. Other loans it's going to be based on your credit and this will cost you a few hundred dollars every month but should in no way dissuade you from purchasing a home or saying “I will have to buy whenever 20% down”, don't think like that. You will make that 20 percent by just purchasing and purchasing now. Unfortunately, this is going to cost you a few hundred dollars every month. 

The difference too isn't multiple types of loans out there and there's something you should definitely know about and that's the FHA loan versus a conventional loan. An FHA loan may show better interest rates up front but they're going to have a higher PMI fee. So you take that interest rate, you take that PMI fee and that's a combined rate, that's your combined payment. 

A lot of times people don't realize that for a few thousand more, you can probably qualify for a conventional loan. Yeah, maybe it might have a little bit higher interest rate but much lower PMI rate. So that combined payment is going to be much lower. 

Of course, if all you can do is FHA to get into a house, do it. Don't wait till you have 20% down, you'll probably earn 20%, just living there a few years and paying your mortgage on time. 

DOZENS OF LOW RATE PROGRAMS AVAILABLE. FIND OUT WHAT PROGRAMS ARE BEST FOR YOU.

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Now for the bonus round, something that most banks in Southern California don't ever tell you about and that is an interest rate buydown. A lot of people don't realize that you can actually pay money to get a lower monthly payment and lower your interest rate by quarter percent, half a percent sometimes, even a full percent. Now, our clients in Southern California, we share this benefit with them. A lot of times banks won't tell you about it because they think you might think it's a scam or something like that but yeah, it's completely legit. It's called an interest rate buydown, where you spend money up front, to get a lower payment for the next 30 years for the life of the loan and never changes. 

Now, what we do to help our clients is we offer rebates to help give this money as a credit to them so they could use it to buy down their interest rate, to help them qualify for lower payments and get a better deal in Southern California. 

So if you're interested in taking the next step and seeing what we can do to help you get pre-qualified for the lowest payment possible, you're going to want to give us a call at 562- 521-8575 or schedule a call or meeting. 

And you'll actually find time on my calendar for us to speak and we can help guide you to get the lowest payments possible on your next Real Estate purchase. What we'll do is we'll show you exactly what you qualify for today and we'll create a plan on what you can do to improve your monthly payments right now and we can start working on it even while you're in the middle of escrow.

I wish you the best and happy house hunting!

This article is written by Matthew Silva, a real estate broker who helps you buy, sell and invest in Southern California especially in local areas such as Buena Park, Cypress, Cerritos, Downey, Huntington Beach, Lakewood, La Mirada, Long Beach, Los Alamitos, Santa Fe Springs, Westminister, and Whittier.