Don’t wait until tomorrow! Is Now a Good Time for a HELOC Refinance? (Yes: And Here’s Why)

Motivation

Now is a good time for a home equity line of credit (HELOC). Changing conditions in the housing market, home prices, and listings mean that you can take advantage of these conditions and put some of the equity in your home to work, benefiting your financial goals.

According to RE/MAX’s national housing report, Los Angeles County’s home prices began dropping in 2022 compared to 2021. In December 2022, LA Metro area home prices dropped about 5%, according to Spectrum News 1. The LA area isn’t the only one that saw drops in home prices and listings in 2022. San Francisco, Honolulu, and Phoenix also saw similar home price drops.

What does this mean if you’re considering a home equity line of credit (HELOC) or home refinance? Home prices can affect how much equity you have in your home. However, if you have owned your home for a long time, you’re likely to have a lot of equity. Increased price drops could negatively influence the benefits you could get from a HELOC, so now is an excellent time to act if you’ve been considering a HELOC.

What Are Some Uses For a HELOC?

HELOCs are flexible. Some use the line of credit to pay for home improvements; others use the line of credit to pull money out to invest. You don’t have to use the HELOC all at once. You can spend it over time and only use the part you need, reserving some for another future purpose or need.

Some borrowers use a HELOC to pay for home improvements or to make significant purchases, like a boat or recreational vehicle. Others use HELOCs to pay for their children’s educational expenses. Older borrowers might use a HELOC to finance travel they’ve always wanted to take or to purchase investments that can outperform the HELOC interest rate, like annuities.

HELOCs Can Benefit You In Today’s Interest Rate Environment

The Federal Reserve is expected to continue to increase the prime interest rate, meaning that mortgage and HELOC rates will likely continue to rise. You can put your home’s equity to work for you today by contacting the HELOC experts at California Platinum Loans.

Sources: Pimentel, Joseph. “Los Angeles for sale listings, home prices drop in December,” Spectrum News 1, 19 January 2023, URL:

ReMAX, LLC. “RE/MAX® National Housing Report for December 2022,” PR Newswire, 18 January 2023, URL:

California Platinum Loans

  https://californiaplatinumloans.com

Unlock the Power of Home Equity with a HECM Loan! Learn how this financial tool can help seniors live a more comfortable retirement.

Unlock the Power of Home Equity

A HECM loan is a “home equity conversion mortgage.” This is a government-insured mortgage that is only available for homeowners who are age 62 or older.

HECM loans are insured by the Federal Housing Administration (FHA). FHA-approved lenders only offer them. 

HECM loans are reverse mortgages. They allow older homeowners to withdraw a portion of their home’s equity for living expenses or other needs.

How Are HECM Loans Different From Other Reverse Mortgages?

HECM loans are government-insured. Other reverse mortgages aren’t.

HECM loans also include protections for borrowers. They also have requirements for borrowers that other reverse mortgages don’t. Borrowers for HECM loans need to be:

  • 62 years old or older
  • Own their property outright (or paid down a lot of equity)
  • Live in the home as a primary residence
  • Not have any federal debt (like unpaid income tax)
  • Be able to pay property tax

What Are Other Requirements For HECM Loans?

HECM loans need to meet all flood requirements and FHA property standards. Only single-family homes or 2-4 unit properties can qualify.

If you have a condo, it needs to qualify for HUD approval for the loan. Condo units also need to meet FHA single-unit approval standards. Some manufactured homes may also qualify for a HECM loan, as long as the home meets FHA standards.

How Does The HECM Loan Pay The Borrower?

As a reverse mortgage, the HECM loan pays income to the borrower. There are five options for how the funds from the loan can be paid or used:

  • Equal monthly payments: as long as one borrower is alive.
  • Term payments: equal monthly payments for a fixed term.
  • Line of credit: unscheduled payments, made on request of the borrower.
  • Modified tenure: a combination of equal monthly payments and a line of credit as long as one borrower is alive.
  • Modified term: A combination of equal monthly payments and a line of credit for a fixed term.

HECM mortgages can help older homeowners to stay in their homes and live comfortably. You need to complete a HUD-approved counseling course to receive the loan. If you are looking into reverse mortgages, contact California Platinum Loans to speak with their qualified, experienced staff. They can explain how this FHA-insured mortgage program works in detail.

Sources: U.S. Department of Housing & Urban Development, “How the HECM Program Works,” URL:

California Platinum Loans

  https://californiaplatinumloans.com

Maximize Your Home-Buying Power in LA: A Complete Guide to Choosing the Right FHA Loan Terms – 15-Year VS 30-Year Options & Pros/Cons!

Maximize Your Home-Buying Power in LA A Complete Guide to Choosing the Right FHA Loan Terms 15Year vs 30Year Options ProsCons2

Could you get an FHA 15-year or 30-year mortgage to buy a home in Los Angeles? According to the Department of Housing and Urban Development (HUD), as of 2021, 10.85% of home purchase loans nationwide were FHA loans. And about 4.83% of home refinancing loans in 2021 were FHA loans. 

The number of people using FHA loans to buy or refinance a home is going up: during the third quarter of 2022, 12.45% of home purchase loans were FHA loans, along with 12.17% of refinances.

Pros and Cons Of Different FHA Loan Terms

FHA loans can be offered to borrowers with lower credit scores and come in 15-year and 30-year terms. Both 30-year and 15-year FHA loans can provide up to $1,089,300 for a single-family home and up to $2,095,200 for a 4-unit property. So, then what may you ask are the pros and cons of 15-year FHA home loans and 30-year FHA home mortgages?

FHA 15-Year Mortgage Advantages

Borrowers who take out 15-year mortgages pay less interest over the term of their loan than borrowers with longer loan terms. One option for some buyers is to take out a 30-year mortgage and then refinance into a 15-year mortgage to reduce interest costs and increase the amount of equity they have in their home. 

FHA 15-Year mortgages are available and can be a good option for buyers who want to pay their mortgage off in half the time of a traditional, 30-year mortgage term.

FHA 30-Year Mortgage Advantages

FHA loans are available for borrowers with lower credit scores or a short credit history. They also have more lenient debt-to-income (DTI) ratios than conventional home mortgages. An FHA home loan can help some borrowers buy a property they otherwise couldn’t afford due to the lack of a high down payment or a DTI ratio that doesn’t meet conventional mortgage criteria. Because Los Angeles County has increased home prices, FHA loans are available for over $1 million.

Downsides of FHA Loans

FHA loans can come with higher closing costs than conventional loans. They also require mortgage insurance premiums (MIP). FHA loans also require appraisals that ensure the property meets government standards to qualify for the loan.

Contact the experts at California Platinum Loans today and learn whether an FHA loan is right for you or whether you will benefit more from a traditional conventional loan or a non-qualified mortgage loan as a self-employed entrepreneur or business owner.

California Platinum Loans

  https://californiaplatinumloans.com