Creative Financing Solutions to Help You Buy a Home in LA
Creativity can be key
For most people, buying a home is the most significant investment of their lives. And seeing that the average home cost in LA is $902,989, it's no wonder that people often struggle with finding the necessary funds to make their purchases. But, while most are aware of home loans and mortgages, few consider other financial options. Well, to help shine some light on this topic and hopefully increase your budget, we will take a look at a couple of financing solutions to help you buy a home in LA.
Different financing solutions to help you buy a home in LA
Home loans and mortgages are the most common options because they are the easiest to get. If you have a good credit score and a steady job, you can likely get a loan to help you purchase an LA home. On the other hand, the following financing solutions can be a bit harder to attain. They are much more situational, which makes them less known for the broader audience. But, if you find yourself in a situation where you can use one of these solutions, you should give it a go.
Get help from the government
Specific demographics are eligible for a government-issued loan for their home. The agencies that can provide you with a loan are:
FHA - Federal Housing Association
USDA - U.S. Department of Agriculture
VA - Department of Veteran Affairs.
LACDA - The Los Angeles County Development Authority
These usually require a lower credit rating than you would have to have for a standard bank loan. But you will have to provide extra documentation to prove that you are eligible. You will also likely get mandatory mortgage insurance, along with mortgage rate benefits. Veterans, especially, can hardly hope to get a better loan deal than the one provided by VA.
Find an investor
If you are planning to move to a relatively poor neighborhood like Downtown or University Park, you might be able to find an investor to help you with your home. What's important to understand here is that if you move to a poor neighborhood, you will likely increase the property value of your area. And if a savvy investor wants to make use of that increase, they could be better at helping you finance your purchase. Mind you, this help from the investor will come at a cost, as their goal is to make as much money from you as possible. So, before you sign anything, make sure that you fully understand what you agree to. Nevertheless, if you plan to buy an LA home, try to keep this option in mind.
Use crowdfunding
In the modern-day and age, people crowdfund everything. Some crowdfund their business to provide a new service. Some crowdfund their education through an emotional story. So, why not try to crowdfund your home purchase. If you can make the reason behind buying your home noteworthy enough, you just might get the necessary funds to purchase it. You'd be surprised at how effective a well-crafted story can be at convincing people to donate a bit of money to your cause. And, if you manage to strike the right cord, you can easily finance your home without any loans.
Rent until you own
The final financing solution we have for you is to rent out your home until you own it. Mind you, when most people buy a home, renting it out is usually the last thing on their minds. After all, you are probably looking for a decent place in LA to settle down. But, if you plan on retiring in LA, renting to own can be just the solution.
By renting out, you can cover your mortgage payments. While this sounds great, as you essentially wait until you own your home, being a landlord does come with its own set of difficulties, especially if you don't already reside in LA. You can choose to move here. But this is rarely cost-effective, even if you hired Good Neighbors Moving Company when you were looking for budget-friendly movers. So, all in all, if you are in no rush to own a home, you can consider this financing option. Otherwise, it is likely not viable.
Before buying a home
While these financing solutions may help you purchase a home, there are a couple of things you need to keep in mind. Namely, just because you can afford the cost of the house, it doesn't mean that you can afford to buy it. Certain home purchase costs often fly under the radar and surprise the inexperienced home buyer.
Moving to LA
If you are not situated in LA, you will have to relocate here after purchasing your home. Ideally, you will move here before buying a home in order to settle in, familiarize yourself with the city, even meet new neighbors. Doing so will not only help with both the purchase and the relocation. But it will also allow you to meet people in the area with much more ease. Whenever you do decide to move, know that your relocation will likely cost a decent amount.
Extra costs
It won't take much for you to find out that living in LA does come at a specific price. Namely, besides buying your home, you will have to pay:
Property taxes
Homeowners Association Fee
Private mortgage insurance
Homeowners insurance
Utilities
Add to this the cost of renovation and refurbishing, and you'll soon understand why you need the extra fund to own a home.
If you are having a hard time figuring out your finances, we strongly suggest you consult with a finance consultant. Not only will they give you their financing solutions to help you buy a home in LA, but they will help you avoid financial stress too. That way, you will have a good idea of the best course of action and whether you can afford to be a homeowner.
