Optimize Your Mortgage Possibilities: Manage your loan-to-value (LTV) ratio with our expert tips for reducing risk, lowering interest rates, and building equity in your property. 

girl on computer studying LTV

Effectively managing your loan-to-value (LTV) ratio is crucial for homeowners who manage their mortgages successfully. A higher LTV ratio can increase interest rates and make qualifying for a mortgage difficult. Luckily, borrowers can use strategies to decrease their LTV ratio, such as making extra mortgage payments, increasing their down payment, or opting for a smaller mortgage loan. These strategies highlight the advantages of lowering your LTV ratio.

Strategies for Reducing Your LTV

Properly managing your loan-to-value (LTV) ratio is vital for your mortgage success. A lower LTV ratio reduces interest rates and monthly payments and decreases risk for the lender, making mortgage qualification easier.

Here are some approaches to decrease your LTV ratio:

Make Extra Mortgage Payments: By making additional mortgage payments towards the principal, you can reduce the outstanding loan balance and increase your property equity. This ultimately lowers your LTV ratio and may lead to reduced interest rates.

Increase Down Payment: Making a larger down payment when purchasing a property is another method for lowering your LTV ratio. A more substantial down payment boosts your property equity, decreasing the amount you need to borrow. This leads to a lower LTV ratio and potentially reduced interest rates.

Opt for a Smaller Mortgage Loan: If a larger down payment isn’t feasible, consider decreasing your LTV ratio by applying for a smaller mortgage loan. This may involve exploring less expensive properties or saving for a larger down payment before seeking a mortgage. By borrowing less, you can reduce your LTV ratio and qualify for better mortgage terms.

Benefits of Lowering Your LTV

Reducing your LTV ratio offers several benefits when managing your mortgage. For instance, a lower LTV ratio generally means decreased interest rates, which can help save on monthly payments and over the loan’s life.

A lower LTV ratio can also make mortgage acquisition easier, as it minimizes lender risk. This may result in improved loan terms, such as reduced fees and more favourable repayment schedules.

Lastly, lowering your LTV ratio can help you build equity in your property more rapidly. Decreasing the amount you need to borrow can increase your property equity and potentially accumulate wealth over time.

Your LTV ratio is a critical aspect of managing your mortgage. By employing strategies like making extra mortgage payments, increasing your down payment, or opting for a smaller mortgage loan, you can reduce your LTV ratio and enjoy the benefits of lower interest rates, better loan terms, and accelerated equity building.

California Platinum Loans

  https://californiaplatinumloans.com

Seniors in Los Angeles, beware of the risks associated with reverse mortgages. Educate yourself before making any financial decisions today.

senior with cash

Like any other important financial decision, choosing to take out a reverse mortgage comes with potential risks as well as potential benefits. You have may have built up a lot of equity in your home in the Los Angeles area. In this case, you can have several choices in reverse mortgage. It’s important to understand your options and the risks that could be involved with a reverse mortgage to make the choices that are right for you.

Reverse Mortgages Use Your Home’s Equity

How much is your paid-off or nearly paid-off home worth? This is the equity in your home. In a high-cost area like Los Angeles County, home values can mean you have much more equity in your home than your original home mortgage amount.

As a result, one important thing to remember about reverse mortgages is that they use the equity that you have built up in your home. You have the potential to tap into a significant amount of equity through a reverse mortgage.

You can invest the funds from a reverse mortgage, or you can use them to pay for living costs. However, using your home’s equity through a reverse mortgage means that the equity could be at-risk.

Considerations of Risk With Reverse Mortgages

With a reverse mortgage, you continue to own your home. That means that you remain responsible for property tax, maintenance costs, upkeep of the home, and homeowners’ insurance.

Reverse mortgages are also intended for primary residences.
If you move away for a long period of time, the lender could foreclose on the mortgage. They could also foreclose if you do not pay for homeowner’s insurance or property taxes.

According to the National Council on Aging, some homeowners have also lost their homes because they failed to meet Federal Housing Administration (FHA) requirements for home maintenance. 

Using A HECM (Home Equity Conversion Mortgage)

An HECM is a specialized type of reverse mortgage that is available for adults over age 62. This type of mortgage is issued by lenders who have been approved by the Federal Housing Administration (FHA). 

The FHA has established regulations for HECM mortgages which are intended to protect you, the borrower, as well as the lender. People who apply for an HECM mortgage must complete a counseling course with an agency approved by the U.S. Department of Housing & Urban Development (HUD). The course explains the benefits and potential risks of an HECM mortgage for older adults.An experienced mortgage broker can explain the reverse mortgage process to you. They can also link you with an FHA-approved HECM lender. They can guide you through the HUD counseling process and explain the risks involved in a reverse mortgage.Contact California Platinum Loans today to learn more.

Sources:

Mohr, Angie. “The Dangers of a Reverse Mortgage,” Investopedia, 30 May 2022,

National Council on Aging, “A Guide to Reverse Mortgages for Older Adults,” 6 March 2022,

California Platinum Loans

  https://californiaplatinumloans.com

Mortgage Rates have Significantly Decreased Since mid-November but Home Delistings Hit Record High Existing Housing Inventories Skyrocket Upwards

Mortgage Rates

Home Delistings Hit Record High in November as Buyers and Sellers Retreated

During the 12 weeks ending Nov. 20, a record 2% of U.S. properties for sale were delisted weekly on average, up from 1.6% the previous year. Since then, the amount has somewhat decreased, falling to 1.9% during the 12 weeks ending Nov. 27, including the Thanksgiving holiday. Redfin’s research of MLS data from 43 of the 50 most populated U.S. metropolitan areas—those with enough data—shows that this is the case. 

Because they frequently receive no offers for the price they wish to sell for and occasionally no offers at all, sellers are pulling their properties off the market. This is due to a severe decline in demand from homebuyers brought on by rising mortgage rates and steadily rising housing prices. Although mortgage rates have significantly decreased since mid-November, this has not yet brought many buyers back into the market 

Existing Housing Inventories at 7-Year High

As dropping rates enticed some buyers back in, Redfin, a Seattle-based brokerage, said its Homebuyer Demand Index increased last week. Yet, with the average home for sale staying on the market longer and the number of homes for sale continuing to climb, many prospective buyers are waiting for cheaper rates and prices.

Based on the report, the number of homes for sale increased by 15% annually during the four weeks that ended on Dec. 4. This is the most significant increase since at least 2015. However, the number of new listings decreased by more than 20%, indicating that more people are choosing to wait it out while looking for a home while mortgage rates and home prices continue to fall from their peaks.

However, as mortgage rates continued to fall from their peak in early November, the Redfin Homebuyer Demand Index recovered from its low point, rising 5% from a week earlier. The typical American homebuyer now pays around $50 less per month for housing, thanks to falling rates.

Among 11 of the 50 most populous U.S. metro areas, six of which are in California, home sale prices decreased from a year earlier. Prices in San Francisco dropped 7.8%, San Jose 3.6%, Los Angeles 2.2%, Detroit 1.4%, Sacramento 1.2%, and Pittsburgh 1.1%. In Oakland, Anaheim, Austin, Philadelphia, and Phoenix, they decreased by less than 1%.

Mortgage Rates Drop After CPI Report, Housing Market Still In Trouble

According to Mortgage News Daily, the 30-year fixed mortgage’s average rate decreased to 6.28% on Tuesday. It is presently at its lowest point since the middle of September. The dip happened after the consumer price index for November, a widely followed indicator of inflation, came in lower than predicted. Investors poured into the U.S. as a result of the report. Treasury bonds decreased yields. Mortgage rates roughly follow the yield on the 10-year Treasury.

Mortgage rates began to climb at the outset of this year and picked up speed in the spring and summer. By the end of October, the 30-year fixed rate had increased from about 3% to well over 7%, which caused an early deep freeze in the housing market. According to the most recent data from the National Association of Realtors, sales of existing houses have decreased for nine months and were down 24% in October compared to the same month last year.

But after the CPI report for October showed that inflation was slowing, rates then dropped significantly in November, which ended at a rate of 6.63%. Some speculated, if warily that the rate decrease may be luring buyers back into the market. 

Next week’s potential market-moving reports are:

  • Monday, December 19th – NAHB Home Builders’ Index
  • Tuesday, December 20th – Building Permits (SAAR), Housing Starts (SAAR)
  • Wednesday, December 21st – Consumer Confidence Index, Existing Home Sales (SAAR)
  • Thursday, December 22nd – – Initial and Continuing Jobless Claims
  • Friday, December 23rd – New Home Sales (SAAR), PCE Price Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

California Platinum Loans

  https://californiaplatinumloans.com