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.

Consumer Price Index rose! Shook the Financial Markets in September, Meantime New Mortgage Applications Experienced a Minor Downward trend Considering Rate Hikes while MBA Sees Job Numbers as Positive for Housing Market

Consumer Price Index

Inflation Increased 0.4% in September, Despite Rate Hikes

In September, consumer prices for a wide range of goods and services increased more than anticipated as rising costs continued to drag on the U.S. economy.

According to the Bureau of Labor Statistics, the consumer price index rose 0.4% for the month, more than the 0.3% Dow Jones prediction. The report first shook the financial markets, sending Treasury rates higher and stock market futures falling as traders increased their expectations for future, more aggressive interest rate increases from the Federal Reserve. However, in the morning trade, the earlier losses were reversed, and by 1:30 p.m., the Dow Jones Industrial Average had risen more than 800 points. ET. 

The cost of food increased significantly, elevating the headline figure. Like August, the food index rose 0.8% for the month and was up 11.2% from the previous year. 

This increase somewhat offset a 2.1% drop in energy prices, including a 4.9% drop in gasoline. According to AAA, the cost of regular gasoline at the pump increased by about 20 cents in October compared to the previous month.

Despite the Federal Reserve‘s intense efforts to rein in price increases and slowdowns in specific important sectors that officials are monitoring, inflation is increasing.

Rates Aside, MBA Sees Job Numbers as Positive for Housing Market

Last week, the number of mortgage applications decreased again, but the reductions were minor compared to the double-digit losses in all indexes on September 30. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a gauge of the volume of mortgage loan applications, fell 2.0 percent during the week ending October 7 on both a seasonally adjusted and unadjusted basis. The Refinance Index likewise decreased by 2.0 percent from the previous week. At 29.0 percent, the refinance portion of mortgage activity remained constant from last week. The unadjusted and adjusted Purchase Indices decreased by 2.0 percent weekly. 

The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.

Next week’s potential market-moving reports are:

  • Monday, October 17th – No Report
  • Tuesday, October 18th – NAHB Home Builders’ Index, Capacity Utilization Rate
  • Wednesday, October 19th – Building Permits, Housing Starts
  • Thursday, October 20th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
  • Friday, October 21st – Index of Common Inflation Expectations

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.


US Housing Prices Fall for First Time Since 2012 Market seeing a great deal of unfulfilled housing demand Homebuyers Relieved By Slightly Lower Mortgage Payments

Cross road

Homebuyers Relieved By Slightly Lower Mortgage Payments

The hot seller’s market is beginning to cool off, helping US homebuyers despite economic headwinds. In August, the national median mortgage payment dropped marginally to $1,839 from $1,849.

According to the Purchase Applications Payment Index (PAPI) of the Mortgage Bankers Association, which gauges how new monthly mortgage payments change over time – relative to income – homebuyer affordability improved for the third consecutive month in August.

The national PAPI decreased to 157.9 in August, a 0.3% decrease from July and an increase of 36.5% from the previous year. As a result, new mortgage payments use an average person’s salary less quickly. The national mortgage payment between July and August 2022 remained constant at $1,210 for borrowers applying for lower-payment mortgages (the 25th percentile).

In August, the median loan amount was $313,500, down from a peak of $340,000 in February, according to Seiler. Edward Seiler, MBA’s AVP of housing economics and executive director of the Research Institute for Housing America.

US Housing Prices Fall for First Time Since 2012

The S&P CoreLogic Case-Shiller index revealed on Tuesday that a national index of prices in 20 major cities dropped 0.44% in July, the first decline since March 2012. The most recent real estate crash ended in 2012, kicking off ten years of price increases that were followed by a two-year pandemic purchasing frenzy.

However, the Federal Reserve quickly ended the celebration in its fight against inflation. Mortgage rates doubled this year, pricing out many potential purchasers and triggering a decline in sales.

Values are currently declining. San Francisco (-3.6%), Seattle (-2.5%), and San Diego (-2%) experienced the most significant month-over-month drops in July.

Yes, prices are still very high. In July, the Case-Shiller national index increased 15.8% year over year. However, it was the weakest advance since April 2021, and the index’s regression from the 18.1% increase in June was the biggest ever.

There are indications that there is a great deal of unfulfilled housing demand. According to government data released Tuesday, new home sales in the US unexpectedly increased in August. The rate of new home sales was at its highest since March, possibly due to purchasers racing to beat additional hikes in borrowing prices and take advantage of price reductions by some builders. All regions saw an increase in new house sales, with the South seeing the most significant increase of 29.4% this year.

Compared to the two-year epidemic frenzy, characterized by many offers and a scarcity of listings that compelled buyers to make giant bids, the falloff appears dramatic. Fewer properties are entering the market, which might help maintain prices high. Due to the decreased demand, postings are now staying on the market longer, increasing the available inventory.

Humor of the Week

I really wish I could find out what happened with my friend that couldn’t pay his mortgage.

You know, just for closure.

Next week’s potential market-moving reports are:

  • Monday, October 3rd – Construction Spending
  • Tuesday, October 4th – Job Openings, Quits 
  • Wednesday, October 5thADP Employment Report, Pending Home Sales Index
  • Thursday, October 6th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 7th – Unemployment Rate, Average Hourly Earnings

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.