Refinance Mortgage California Guidelines For Homeowners

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Refinance Mortgage California Guidelines For Homeowners

This BLOG On Refinance Mortgage California Guidelines For Homeowners Was UPDATED On September 3rd, 2018

Generally, housing prices in California are one of the most highest in the country. Average loan size in the state of California is $434,500 where it is $221,430 in the rest of the country.

  • Housing values in California have historically been higher than other parts of the country
  • California has probably the highest housing prices on the West Coast and has one of the highest home prices in the nation
  • Certain areas like Los Angeles, San Diego, Irvine, and San Francisco has one of the most expensive housing prices in the nation
  • If home buyers compare California and Florida housing prices, buyers can get twice as much home in Florida for the same square footage home in California

California Real Estate Market Crash

The real estate and credit collapse of 2008 has really crushed real estate prices for the whole state of California. The drop in home values in California was more so than any parts of the country.

  • There were areas of San Diego, Irvine, Los Angeles, and San Francisco where home prices have dropped 50%
  • California, like many parts of the country has had double digit real estate appreciation for over 12 years until the Great Housing and Financial Collapse of 2008
  • Foreclosure rates, bankruptcy rates, and unemployment rates in California was one of the highest in the country
  • Thousands of homes have witnessed their hard earned equity in their California homes not just evaporate, but have their mortgages under water
  • Those seeking refinance mortgage California could not even think about it due to their California homes being under water
  • Underwater mortgages means that their mortgage balances are higher than the value of their homes
  • California faced a real estate crisis
  • Many California homeowners who counted on the equity in their homes for their retirement were left stuck in their homes for many years to come
  • Others had no choice but to go through a bank foreclosure, deed in lieu of foreclosure, or short sale
  • Yet others filed for bankruptcy

Homeowners With Negative Equity Can Now Think About Doing A Refinance Mortgage California

For homeowners who had mortgage balances that were higher than the value of their homes in California, they should see if they qualify for a refinance mortgage California.

  • Many underwater homeowners do not realize that California home prices have been appreciating double digits the past several years
  • Those who wanted to move or planned on moving with homes with underwater mortgages never thought they would be able to sell their homes due to being upside down
  • Due to the fact that their California home was underwater and thought that they would be stuck there their whole lives never in their dreams did they think they will recoup the equity lost
  • Many homeowners are surprisingly shocked when they find out that their homes have appreciated 20% or more in the past couple of years
  • There are still homeowners in California who have their mortgage rates in the high 7%
  • Some California homeowners have mortgage rates as high as in the 8% range
  • Many California homeowners could not qualify for the Home Affordable Refinance Program, also known as HARP, due to the fact that their mortgages were not owned by Fannie Mae and Freddie Mac
  • For these hard working California homeowners, they can now see the light at the end of the tunnel
  • Due to the appreciation of their California home, now they have an opportunity to do a refinance mortgage California or sell their homes at a profit
  • California homeowners can refinance to lower their mortgage rate or to do a refinance mortgage cash-out

Refinance Current FHA Loan To A Conventional Loan In California

FHA Loans are a loan program for first time home buyers as well as home buyers who have prior bad credit, higher debt to income ratios, and can only afford a minimal down payment.

  • FHA loan programs only require a 3.5% down payment for a home purchase with minimum credit score of 580 to qualify for home purchases
  • California homeowners who were fortunate enough to purchase their home when California home prices were at their low after the 2008 Real Estate Market Collapse with a FHA loan can now qualify for a refinance mortgage California with a Conventional loan and eliminate FHA MIP

Why Refinance FHA To Conventional Loan?

FHA loans have mandatory FHA monthly mortgage insurance premium which is 0.85% of the mortgage balance. FHA homeowners needs to pay this monthly FHA mortgage insurance premium for the duration of the term of 30 year FHA Loans.

  • Average California mortgage balances are at $500,000
  • Many homeowners with FHA Loans still have the 1.35% FHA Mortgage Insurance Premium
  • For a California borrower with a $500,000 FHA mortgage balance, borrower needs to pay the 1.35% annual mortgage insurance premium of ($500,000 mortgage loan balance, multiply by $1.35% annual FHA mortgage insurance premium, divide by 12 months ) of $6,750 per year
  • This is $562.50 per month for the duration of their FHA insured mortgage loan
  • By refinancing FHA to conventional loan, homeowners can eliminate paying the mortgage insurance
  • Homeowners without 20% equity in their home can take advantage of LMPI, Lender paid mortgage insurance, conventional loan program
  • Homeowners with at least 20% equity can get very best conventional mortgage rates in California with no private mortgage insurance required

Has California Home Appreciated In Value?

There are many California homeowners who purchased their homes a couple of years ago and their homes have appreciated by 20% or more.

  • Even if home has not appreciated 20%, there are conventional mortgage loan programs that do not require private mortgage insurance
  • California homeowners who purchased home a year or longer ago with a FHA Loan may want to explore the idea of doing a refinance mortgage with a conventional loan to eliminate the FHA required annual insurance premium
  • FHA MIP needs to be paid for the duration of FHA 30 year fixed rate mortgage loan

Gustan Cho is a mortgage banker and correspondent mortgage lender that specializes in refinance mortgage California as well as California purchase mortgage loans.  The Gustan Cho Team at Loan Cabin Inc. does not have any mortgage lender overlays on government and/or conventional loans.  We go straight off DU or LP FINDINGS. An approve eligible through Fannie Mae’s or Freddie Mac’s Automated Underwriting System is the loan commitment if borrowers can clear conditions on AUS.  All of our pre-approvals are full loan commitments that has been fully underwritten and signed off by our underwriters. Visit us now by clicking the APPLY NOW icon on the top right.  Borrowers with any questions concerning a refinance mortgage California, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response.

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