How to Qualify for a Home Loan in Hermosa Beach and Manhattan Beach
Qualifying For A Home Loan
If you’re buying in Hermosa Beach or Manhattan Beach, you’re most likely working with a loan amount well above the national average. Home prices here regularly push loans into jumbo territory, and lenders scrutinize jumbo applications more closely than conforming ones. Here’s what they’re actually looking at when they decide whether to approve you.
Determine the loan type and down payment you will need
Once you’ve found the property you want, you’ll need to settle on the loan type that fits it. In Hermosa Beach and Manhattan Beach, that most often means comparing jumbo loan terms, since most local home prices exceed conforming loan limits for Los Angeles County. Down payment requirements vary by loan type and lender, so it’s worth getting quotes early rather than after you’re already in escrow.
Check your credit report
Your credit score will be one of the main identifiers that lenders use to find out whether you’ll be able to pay off a mortgage. The higher your credit score, the better chance you will qualify a larger loan or a better rate. Make sure to review your credit score and double-check your current balances and statement of accounts. Sometimes credit reports can have errors as well; get it early so you’ll have time to get it corrected.
Employment
Lenders also check your employment history, since a stable work record signals lower risk. If you’re self-employed or run a business, which is common among South Bay buyers, expect to provide two years of tax returns rather than pay stubs, and budget extra time for underwriting.
Income and Expenses
Your lender will look at your income and where it’s coming from. Furthermore, they will also determine your fixed expenses and debt. The disparity between these two variables allows lenders to determine whether or not you qualify for the loan. Ideally, your monthly payment should not exceed 28% of your monthly income.
If you’re financing a home you plan to renovate, Levine Homes Real Estate & Construction can also give you a realistic read on renovation costs before you commit to a loan amount, since Mike Levine is a licensed broker and CSLB general contractor. We’re happy to walk through the loan process and answer your questions. Call us at (310) 796-9088.