California Housing Prices
By Gustan Cho
Generally, housing prices in California are one of the most highest in the country. Housing values in California have historically been higher than other parts of the country and California has probably the highest housing prices on the West Coast. Certain areas like Los Angeles, San Diego, Irvine, and San Francisco has one of the most expensive housing prices in the nation. If you compare California and Florida housing prices, you 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, 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 mortgage loans under water. Those seeking refinance mortgage in California could not even think about it due to their California homes being under water, which means that their mortgage loan 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 and others had no choice but to go through a bank foreclosure, deed in lieu of foreclosure, or short sale.
Homeowners With Negative Equity Can Now Think About Doing A Refinance Mortgage In 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 in California. Many underwater homeowners do not realize that California home prices have been appreciating double digits in the past couple of years. Those who wanted to move to other parts of California or other states gave that thought aside due to the fact that their California home was underwater and thought that they would be stuck there their whole lives. 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 5% and some even have mortgage rates as high as in the 8% range. These California homeowners could not qualify for the Home Affordable Refinance Program, also known as HARP, due to the fact that their mortgage loans 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 because due to the appreciation of their California home, now they have an opportunity to do a refinance mortgage in California either to lower their mortgage rate or to do a refinance mortgage cashout so they can consolidate some bills.
Refinance Your Current FHA Loan To A Conventional Loan In California
FHA loans are a great mortgage 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 and a minimum credit score of 580 FICO to qualify for a home purchase. 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 in California with a Conventional loan. Why refinance out of their FHA loan into a conventional loan? FHA loans have mandatory FHA monthly mortgage insurance premium which is 1.35% of the mortgage balance and a FHA homeowner needs to pay this monthly FHA mortgage insurance premium for the duration of the term of the FHA loan. Average California mortgage balances are at $500,000. For a California FHA mortgage loan borrower with a $500,000 mortgage balance, the mortgage loan 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 which is $562.50 per month for the duration of their FHA insured mortgage loan. By refinancing your FHA loan into a conventional loan, you can eliminate paying the mortgage insurance through the LMPI, Lender paid mortgage insurance, conventional loan program or if you have at least 20% equity, you will get the very best conventional mortgage rates in California with no private mortgage insurance required.
Has Your 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 your home has not appreciated 20%, there are conventional mortgage loan programs that do not require private mortgage insurance. If you are a California homeowner and purchased your home a year or longer ago with a FHA insured mortgage loan, you may want to explore the idea of doing a refinance mortgage with a conventional loan to eliminate the FHA required annual insurance premium that you are currently paying for the duration of your FHA 30 year fixed rate mortgage loan.
Gustan Cho is a mortgage banker and correspondent mortgage lender that specializes in refinance mortgage in California as well as California purchase mortgage loans. Gustan Cho does not have any mortgage lender overlays and goes off straight off DU or LP FINDINGS, which is an approve eligible through Fannie Mae’s or Freddie Mac’s Automated Underwriting System. Pre-approvals are issued 7 days a week by visiting www.gustancho.com and clicking the APPLY NOW icon on the top right. Neighborhood Loans are mortgage bankers licensed in California, Texas, Georgia, Illinois, Florida, Washington, Wisconsin, and Indiana. If you have any questions concerning a refinance mortgage in California, please contact Gustan Cho at 262-716-8151.
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