Los Angeles is at the center of one of the most densely populated regions in the country, and its real estate market reflects the heavy interest in, and competition for, available homes. The local median home price of $686,500, from Zillow, a real estate information aggregator, far outpaces the national median of $307,900 shared by the U.S. Census Bureau.
Home prices have climbed steadily in the Los Angeles area from a relative low of $367,000 in February 2012 to what they are today.
The market is expected to reach a median home price of $727,000 by November 2019, continuing the pattern of significant growth. Those increases are influenced by a variety of factors, including local and national economic considerations, including interest rates and overall economic performance.
There are also state-level concerns. California has by far the largest state economy and Los Angeles is the state’s largest city. It’s not surprising that there’s currently strong upward pressure on the real estate market.
When you understand the local and national economy and, more specifically, the area’s real estate market, it’s easier to make informed decisions about a mortgage. Read on to learn more about identifying and securing a home loan in L.A. that meets your needs.
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Current Mortgage & Refinancing Rates in Los Angeles
How Mortgage Rates Are Calculated in Los Angeles
Understanding the many factors that influence the home loan you receive allows you to make the most beneficial decision possible when it comes to securing a cost-effective mortgage. Learning about mortgage rates in Los Angeles is important, but there are other critical needs to keep in mind.
There are many aspects to cover, from the specific policies of different lenders and any special advantages they may provide to the unique elements of each type of home loan.
With a strong grasp of mortgage rates and types, as well as knowledge of the variations between lenders and your own personal financial situation, you have more in control over the process. Keep these four critical elements in mind as you learn more about mortgage rates in Los Angeles.
Credit score
Credit scores have an impact on the majority of home loan underwriting processes and are frequently a crucial factor. Your credit score provides a useful snapshot of your past financial activity and general reliability to potential lenders. Higher scores often lead to more favorable terms and conditions, as lenders tend to view those with high credit scores as less risky.
Credit scores are represented as a three-digit number, range from 300 to 850, and can change over time. The Consumer Financial Protection Bureau (CFPB) has a detailed description that can help you learn more about credit scores and how they are calculated.
Refinance type
Refinancing allows borrowers to adjust their home loans to take advantage of a variety of circumstances. Choosing the right type of refinancing is vital, as the different types of loans have widely different best practices and general outcomes associated with them.
Cash-out refinances allow homeowners to turn their existing equity into liquid assets, although it raises the overall cost of the loan. Cash in refinances, with a higher cash investment, can help homeowners realize lower payments while also improving the loan-to-value ratio. Term refinances aim to reduce overall costs by leveraging interest rate changes and other economic developments.
Loan type
Just as there are many types of refinances, there are also a variety of new home loan options to consider. The traditional mortgage isn’t a single type of loan, but more of an umbrella term that covers many different options. A traditional mortgage might have a fixed rate, which doesn’t change over time, or a variable rate, which is recalculated periodically.
Terms typically are 10, 15 or 30 years. Additionally, specialized mortgages are offered by government agencies such as the Veteran’s Administration (VA), and frequently feature special incentives and additional qualification standards beyond creditworthiness and financial stability.
Federal Housing Administration (FHA) loans, for example, have a lower credit score and down payment requirements, but can only be used on certain types of properties or are restricted to first-time homebuyers.
Length of refinancing term
The time period selected for a refinance loan has a significant influence on both monthly payments and the total cost of the loan. Because of the major differences between term lengths and the significant value of many mortgages, the option you choose will impact your monthly budget and long-term savings.
A shorter-term, like a 10- or 15-year refinance, will involve higher payments but a lower total loan value due to less interest being paid. A longer-term, meanwhile, offers a lower monthly payment, but a higher total value.
Get the Best Mortgage Rates in Los Angeles
There’s one piece of overarching advice to keep in mind as you look for the best mortgage rates and terms in Los Angeles: focus on comparative shopping. By getting quotes and gathering information from several different lenders, you can make a confident choice about the best mortgage for your needs.
As you learn more it becomes easier to find outliers in terms of interest rates, down payment requirements, and other crucial considerations. Researching details about a few different mortgage options from the same lender is also important but may be overlooked in an effort to gather quotes across many mortgage providers.
While you likely have a timeline to follow in terms of moving, don’t rush your mortgage decision. Start the search early on and give yourself enough time to get in touch with several lenders, whether by making online requests for quotes or making phone calls. The CFPB pointed out that close to half of all potential American homebuyers don’t engage in comparative shopping.
If you take this extra step, you’ve already positioned yourself ahead of many others in searching for an effective mortgage.
You should also pay attention to the many fees and costs that are associated with finalizing a mortgage and closing on a home. While the fees charged by government agencies, like the recording fee, are likely not negotiable, you can ask for a reduction or even elimination of many expenses.
It all depends on your individual circumstances. Costs ranging from the loan origination fee to the title search could potentially be lowered.
Recommended companies in Los Angeles
There is a wide range of lenders to choose from in and around Los Angeles. A few of the most reliable include:
Quicken Loans
As an online marketplace that facilities connections between prospective homeowners and lenders that serve a given area, Quicken Loans offers a powerful mix of access, relevance, and ease of use. Lenders that partner with Quicken Loans have a wide variety of mortgage and refinance loans to offer.
Additionally, the online applications offered by this service make it that much easier to compare rates, terms, and other important factors. Additionally, Southern California’s branch of Quicken Loans has an A+ rating from the Better Business Bureau.
J.G. Wentworth
J.G. Wentworth, a direct lender, doesn’t offer the same range of mortgage providers as a home loan marketplace. However, this approach allows for direct communication with a large lender that features a wide range of home loan offerings.
Multiple customer service contact options, a high degree of support for prospective and current customers, and established business history and reputation helped J.G. Wentworth earn a score of 9.4/10 in our own review of the lender.
Ally Bank
Offering a streamlined, user-friendly experience, Ally Bank’s online-only mortgage offering is a powerful choice for those who don’t mind not having a physical branch to visit. Ally doesn’t offer the specialized, government-backed loan options other lenders do, but it still has a large portfolio of offerings.
An additional benefit is its dedicated in-house team of home loan specialists who provide knowledgeable and useful guidance. A minimum credit score of 620 to apply is also helpful, especially for those who haven’t had much time to establish a credit history.
NBKC
As an online-only lender in Los Angeles, NBKC emphasizes its reputation as a dependable home loan provider and the provision of high-quality customer guidance and service. NBKC also offers competitive interest rates, which are a major factor for many potential borrowers, as well as short closing times.
A variety of loan options, including government-backed types from the FHA and VA, add to the diversity of the company’s offerings.
