Tuesday, December 18, 2012

At Least Three-Fourths of Homes Impacted by End of Mortgage Interest Deduction in Blue States

Beautiful Inglewood CA track home 4/3. Zillow 12/2012 $637k
Are the Republicans targeting the mortgage interest deduction as a source of tax revenue (estimated at $100 b per year), because the "rich" who would be impacted are mostly Democrats?  You see, only homes with mortgages over $400,000 are significantly impacted.  Where are the vast majority of homes with those valuations.  New York and California.  Add in Chicago, Boston, and Washington DC, and you have covered all but the mansion class in the rest of the country.  And what do NY, CA, MA, IL, and DC have in common.  They are all solid blue.  

For the hapless remaining Republicans that haven't left California for Texas, they may feel stung by Boehner's and Romney's version of class warfare.  But the Democratic Senators and Congressfolks from those districts are unlikely to fight against changes in the mortgage interest deduction that impact the rich, even if it is their own constituency. 

By the way, if you are a Californian who needs a mortgage, be sure to give us a call at 310-295-6213 and ask for Bill.

Monday, December 17, 2012

Revealed - How Will Change in Mortgage Interest Deduction Effect You

End to Mortgage Interest Deduction Might Not Effect You at All

Here is the clearest analysis I have found, yet.  HT to The San Francisco Chronicle. You can easily check out whether various changes being proposed to the mortgage interest tax deduction will effect your taxes or not.  There are almost as many proposals floating around as there are elected representatives in Congress, but some of the most likely include complete elimination of the interest tax deduction, lowering the maximum cap from $1,000,000 to $500,000, or providing a 15% tax credit on the first $500,000. 

The real estate and mortgage industries are fighting hard to preserve these breaks.  However, the public seems strangely silent.  There appears to be a general failure to understand that A.  Some major change might actually happen;  B.  The effect on annual taxes is substantial for many; and C.  The estimated 15% drop in home values will impact taxpayers who own homes in the $400,000 - $1.4 million range with a one time loss in wealth between $60,000 and $200,000.

Does this effect you?  Do you feel helpless to do anything about it?  Do you feel that it is a noble sacrifice of your assets and earnings?  I'd love to hear from you.

Saturday, December 8, 2012

A Major Injustice and Massive Reverberation Effect: The Number One Reason Homeowners' Interest Deduction Should NOT be Ended

While I have written extensively at http://blog.mortgagehelplosangeles.com on both sides of the question of ending the mortgage interest deduction over the past few weeks, and can see major arguments on both sides, there is one huge, overriding issue that must be addressed if this century-old-benefit is to be done away with.

We are a nation that was founded on the principle of justice.  We are a nation of laws, and we can rightly expect the government to protect our investments, and not do things to destroy them.  The elimination of the home interest deduction would effect homes valued at $500,000 to $1,500,000 as the interest deduction is capped for interest on loan amounts under $1,000,000, and homes of less value are not generally going to take schedule A.

If those homes drop 15% as suggested, a huge number of middle class home owners could see a $75,000 to $200,000 loss of value. That is significant, and would be a gross injustice.  How can we as a people justify such a huge "taking" of property from so many middle class among us.  Is this fair?  Fair is hard to define.  But ask yourself if it is just.

By the way, this change in tax law could be compared to the change in depreciation rules that hit apartment and commercial property owners in the late 80's with a similar massive loss in valuations. Those lost valuations "TOOK" massive amounts of assets from those owners without compensation, destroyed the savings and loan industry, and cost the government and the economy untold billions in unintended consequential losses.

A 15% reduction in the values of homes with values between $500,000 and $1.500,000 would likely also have a huge reverberation effect throughout the economy and further undermine Fannie, Freddie, FHA, and all mortgage lending institutions by putting a another huge swath of homeowners into negative net worth territory.

As usual, most who write on this subject and seemingly our politicians, too, have a hard time seeing the downstream consequences of their actions.  This decision is likely to cost the government more in the short term than it gains through taxation.

Wednesday, November 28, 2012

Schedule A Cap Another Way to Increase Tax Revenue Through Tax on the Rich

As the House, Senate, and Obama Administration rangle over how to avoid the fiscal cliff, most pundits seem completely oblivious to the complexity of the tax issue.  There are multiple tax provisions at stake:
    1.  Highest tax bracket changing from 35% to 39%
    2.  Lowest tax bracket changing from 10% to 15%
    3.  Capital gains tax increasing from 15% to 20%
    4.  Tax on dividends treated as ordinary income
    5.  Social Security contribution increasing by 2%
    6.  25 million additional taxpayers subject to Alternative Minimum Tax
    7.  Standard deduction drops by $2000
    8.  Reinstatement of the marriage penalty
    9.  Reduction in child tax credit

And the list goes on.  For a very detailed and well presented list of the changes in the tax law that will take effect if there is a failure of Washington to reach agreement go here.
Some estimates say that these changes taken together would impact middle class taxpayers anywhere from $700 a year to as much as $2000 per month, depending on income and deductions currently being taken.  Obama has pegged the number at $2200.

But while these amounts may seem like a lot to ask of already struggling citizens, there is a general sense in Washington that revenue must be increased whether or not the economy produces more jobs and income to drive revenues up naturally. 

At the top of the list is the mortgage interest deduction, and the reason it is getting the most attention is because it offers the largest single revenue source.  However, it is hard to find anyone willing to suggest it be repealed entirely. 

One idea that is being suggested is that the total available deductions on schedule A be limited to $50,000.  This would insure that only taxpayers making over $150,000 are impacted.  But, of course, the trade off is that total revenues from such a change would only be a pittance in the effort to reduce the deficit.

Be sure to read our other posts from the last few weeks as we have explored every nook, cranny, and nuance, and have pointed you to other articles that flesh out even more details. 

For more on this subject also read:

Monday, November 26, 2012

Shocking Unintended Consequences if Mortgage interest Deduction is Eliminated

Everyone knows that if you take away the mortgage interest deduction, housing prices will crash, homeowners will lose $1000's in home values and pay huge increases in taxes, and the real estate and mortgage industry will slump back into depression.  But as with so many things, what everybody knows may not be right…this analysis might even be dead wrong. 

Our form of government is particularly horrible at thinking through the unintended consequences of its actions.  A perfect example would be the changing of the way apartment owner's wrote off depreciation back in the 80's.  The increasing of the number of years to fully depreciate an apartment building seemed like a perfectly fair and reasonable thing to do.  One can, however, make a strong argument that the result of that tax decision destroyed the savings and loan industry, and cost the government far more in losses from reduced property values and s & l bailouts than it every gained in tax revenues. 

It is far from clear that any change in the mortgage interest deduction will benefit tax revenues, hurt homeowners, or greatly effect mortgage production.  We are about to enter some tall weeds of analysis, for which I apologize in advance. 

The basic assumptions about the effects of the ending of mortgage interest deductions make claims that are mutually exclusive.  Here is a simple one.  Home prices will drop by 15% according to some studies.  Maybe they will drop more or less than this, but let's take that number.  If home prices do drop by that much, it should be clear that it will provide a boost to the real estate market as cost goes down, demand rises.  At least in the short term, marginal buyers will be benefited as they will have a lower down payment and monthly payment, thus adding buyers to the market.  You could further argue that the added demand would at some point push prices back up until there was a leveling effect.

The above proposition would be true only if prices dropped by 15%.  Unfortunately for the entree level buyer, there is no current tax advantage from mortgage interest deductions.  It is clear that the benefit only starts at about $75,000 in income and $200,000 in total mortgage.  And even for that buyer, the tax savings are modest.  Thus the argument for a drop in values only applies on homes of $250,000 or more, and really, quite a bit more. 

Since the mortgage interest deduction does not apply to amounts above $1,000,000, the home value drop and higher tax rate will most impact homeowners with incomes above $100,000 and mortgages above $500,000, but less than $1million.  If homes in that range drop by 15%, new buyers would have roughly no effect on their purchasing power for that value of home.  The loss of tax advantage would be offset by the lower mortgage amount. 

Current owners with mortgages would have a huge double wammy, potentially driving more in this group into upside down status on their mortgages and reducing their ability to pay.  This could result in more foreclosures in the short term, and a huge loss of wealth and purchasing power from the most productive segment of society. 

If the mortgage interests deduction is even good policy, it would seem to be a very bad idea to abruptly end it.  The effect on realtors and mortgage companies would seem to be limited and short term.  But the effect on the middle class would be substantial.  A phased in approach would lower the impact.  This could be done by setting a maximum on schedule A deductions, reducing the cap on the total mortgage interest deduction, or only allowing a declining percentage of the deduction to be applied. 

Most who argue for this deduction to be dropped, insist that there be an accompanying drop in tax rates by 10%.  This would certainly offset the loss of spending power, thus making the same value of home affordable as before.  If spendable income remains roughly the same, an argument can be made that their would not be the drop in home values as you would have the same number of dollars chasing the same supply of homes. 

Please offer your thinking on this.  Are there any errors in the above analysis?  Are we better off to drop the deductions and have a lower tax rate?

For more on this subject also read:

Monday, November 19, 2012

Government and Mortgage Holders Fight Over $100 Billion Per Year Tax Advantage

The Los Angeles Times reports that the mortgage interest deduction is no small tax benefit.  The US government loses about $100 billion per year or 1 trillion over 10 years. 

The mortgage interest deduction alone will cost the federal government $484.1 billion from fiscal 2010 to 2014 — $98.5 billion in 2013 and $106.8 billion in 2014, according to estimates from the congressional Joint Committee on Taxation. Write-offs by homeowners of local and state property taxes account for an additional $120.9 billion during the same four-year period.

Therefore, as the government looks for revenues to close the massive trillion dollar annual deficit, this "expense" is seen as ripe for the plucking.  Obviously, if it is big ripe plum for the government, it is also a huge benefit to a bunch of taxpayers who are loath to give it up.  The Times goes on to suggest some of the options on the table for changing this tax benefit.

A $25,000 cap on itemized deductions, as proposed by Mitt Romney in the second debate, would hit many people in the $50,000 to $200,000 income range, Kolko said. It would take a much bigger bite out of upper-income households beyond $200,000, of course, where the average total for all itemized deductions came to $81,000 in the IRS data from 2009. Romney's plan envisions that the losses in deductions for all categories of taxpayers would be offset by the lower payments they'd be making based on a one-fifth reduction in marginal rates.

President Obama supports a cutback in housing-related and other write-offs for people with incomes above $250,000.

These are certainly not the only options.  We have listed others here.  However, one that has come to our attention since, is a tax credit similar to the first time homebuyer's tax credit.  This could be used to replace the schedule A deduction.  Some real estate experts say this would have a much bigger impact on getting home sales going again compared to the current mortgage interest deduction.  Existing mortgage holders aren't as enthusiastic about such a change, of course.

Saturday, November 17, 2012

Options to Change or Replace Mortgage Interest Deduction

 As Congress, the President, and the people contemplate how to change the tax law in order to provide increases in revenues through increasing tax rates, closing loopholes, or increasing income through a vibrant economy, the mortgage interest deduction has been at the forefront of possible places to find new revenues.  There are few who suggest just eliminating the tax benefit, but many possible options for reducing or changing the current deduction. 

Among the proposals on how to change this huge "cost" to the government would be:
    ● Only eliminate this deduction for taxpayers in the $250,000 or higher income
    ● Maximize the total amount that can be deducted by anyone
    ● End the benefit on second homes and vacation property
    ● Maximize the total of all deductions on Schedule A
    ● Eliminate the deduction immediately
    ● Phase out the deduction like was done with all other interest during the Reagan

Do you have another approach or have you seen another option?  Please add in the comments.  

Thursday, November 15, 2012

President Obama News Conference: Tax Increase Still On for Rich to Fix Fiscal Cliff

This taxpayer would not be effected with mortgage of $1100.
President Obama today suggested pushing off decisions on tax reform, but immediately increasing taxes on those making over $250,000 through a revised extension of the Bush era tax cuts.  He even appeared to be suggesting that the reduction in employee social security contributions be continued.  Not sure about that, but I don't think either house of congress is likely to approve that extension.

But the hot topic from both pundits and politicians is the schedule A.  The Democrats seem to be embracing Romney's suggestion that the total schedule A deductions be limited to $25,000, meaning that the potential to use mortgage interest and charitable deductions (the big items) would be severely limited.  A $2000 per month mortgage/property tax would cap the category.  This would potentially have a significant impact on homeowners who give generously to charity and have a $600,000 mortgage.  Not exactly the 1%. 

The Democrats may love this idea as revenue generating, and it certainly would be, but they will find that the Republicans will not have forgotten that Romney's plan had a second step.  Reducing overall tax brackets by 10%.  Part A without Part B will never get past the house.  With 46 days to go before we hit the cliff, there are plenty of ideas, but still no leadership.  And it appears that the POTUS is punting most of the issue to another quarter. 

Image thanks to http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/

Also read:

Wednesday, November 14, 2012

More on the Fiscal Cliff and Your Mortgage Interest Deduction - Diana Olick of CNBC

The Cliff and Your Mortgage 

Tuesday, November 13, 2012

9 Reasons to Eliminate the Home Mortgage Interest Tax Deduction

In our continuing series about the possibility that the home mortgage interest deduction will be modified, radically altered, or even eliminated by Congress and President Obama in an attempt to raise more tax revenue, we take a brief look at the top 9 reasons why the tax deduction should go.  
  1. Government should not be subsidizing borrowing.  Home mortgage interest tax deduction is not an incentive to buy a home, but an incentive to borrow money.  Why help the banks?
  2. Current approach artificially increases the value of homes to the detriment of new buyers
  3. Government loses potential tax revenues
  4. The wealthy benefit most, making this deduction regressive
  5. Eliminating this and other deductions simplify the tax code
  6. Current system is unfair to renters
  7. Benefit to homeowners is small, often nonexistent 
  8. Government should not be incentivizing home ownership over renting
  9. Better for middle class to have lower rate or higher standard deduction
These same reasons could also be used to support the choice of modifying the existing tax benefit.  Some in congress are suggesting caps on the total deduction, limiting the deduction for those who are in the top income tax brackets, or phasing out the deduction over several years.  

In most cases the plans being put forth to eliminate or modify the mortgage interest deduction would be offset by increases in the standard deduction or decreases in the underlying tax brackets.  Some would reduce each bracket by 10% and eliminate most loopholes.  

What do you think?  We've laid out the 10 benefits of the mortgage interest deduction to taxpaying homeowners, and 7 Social Benefits of Home Ownership and 6 Social Benefits of Renting, and now 9 reasons to eliminate the deduction.  Have we missed anything?  

Next we will look at whether or not there is actually a significant benefit to a significant number of taxpayers, or whether the elimination of the mortgage interest deduction might actually be a wash to those who currently use it.

Also read:

Friday, November 2, 2012

10 Benefits to Taxpaying Homeowners of Mortgage Interest Deduction

10 Financial Benefits to Taxpayers of Homeownership

In a previous post we laid out the basic arguments regarding whether or not there are societal benefits to homeownership vs renting.  Now we take a look at the financial benefits to the individual taxpayer of owning vs renting.  This will be a brief overview.  In a future post we will dig down into a full and detailed financial analysis.

Unlike a list of social benefits which one could argue that the government might have a reason to subsidize, these benefits are those that the homeowner themselves get from purchasing.  It is part of the equation they would consider in making a purchase rather than remaining a renter.  It is certainly reasonable that this class of taxpayers and voters would "vote their pocketbook" to their advantage. 

Top Ten Financial Benefits of Homeownership
    1.    Provides an asset
    2.    Stabilizes monthly payment
    3.    Control your own destiny
    4.    Forced savings
    5.    Equity available for other purposes
    6.    Potential gain in market value
    7.    Can add to value through improvements
    8.    Establishes credit
    9.    Allows for long term furnishing purchases
    10.    Mortgage Interest and property tax deductions

Clearly, these advantages don't depend on the mortgage interest deduction.  It serves as an incentive, and one can make the argument that it lowers the cost of ownership, providing the owner with the ability to own more house than they could without the deduction. 

Should homeowners vote their personal wallets?  Many others choose their leaders and vote on issues that work to the advantage of a group they are part of.  Or should Americans be more interested in voting for leaders and issues that are best for the country. 

Also read:

Wednesday, October 31, 2012

7 Social Benefits of Home Ownership and 6 Social Benefits of Renting

End of Mortgage Interest Deduction Favor Renting Over Homeownership?  Good idea?

Does homeownership result in a more stable family, neighborhood, city, or nation?  Is owning a home a benefit for owners financially, socially, psychologically, or otherwise?  If it is a benefit, to what extent should it be the governments's business to incentivize ownership over renting?   Answers to these three questions would already require a huge, potentially book length subject, to consider.  We will leave it to a later post to contemplate whether the current incentive is an incentive at all, or whether there might be better ways to achieve the goal, should the goal turn out to be a worthy one.

What are the social benefits of homeownership?

Benefits generally cited include:
    ✓    Neighborhood stability
    ✓    Less crime in the neighborhood
    ✓    Pride in ownership results in better maintenance of personal and public property
    ✓    More civic involvement
    ✓    Student of owners do better in school and have fewer behavior problems
    ✓    Forced savings vehicle results in financial stability
    ✓    Excellent financial investment.  Wealthy population better.

The biggest argument against the benefits listed above is that while those results are clearly related to home ownership, they are not necessarily causative.  In other words, it may be that the kind of people who are more likely to own a home are also more likely to be stable, have pride, be more involved, and have kids who do better.  That argument makes sense in that younger, unmarried adults and those with low paying and more transient jobs are more likely to rent.  Those demographic characteristics would seem to also point to the opposite of the virtues noted in the list.

We will address the financial aspect in another post.

What are the social benefits of renting?

As to the societal benefits of renting:
    ✓    More flexible work force - can move more easily
    ✓    More flexible investing population
    ✓    Renters use less resources
    ✓    Time saved on chores can be used for other things
    ✓    Less stress in financially or job related stress situations
    ✓    No risk of capital

The biggest societal issue would seem to be the stability vs flexibility issue.  There is no question that a workforce that rents is much more likely to uproot and move to where the jobs are and to live closer to the job.  There is also reasonably good evidence that owners as a group are "better" citizens.  

Should the US Government incentivize homeownership through mortgage tax policy?

This leaves open the issue of whether the government should be encouraging one over the other.  Maybe we are better off with a workforce that can move to where the jobs are.  Maybe there should be studies to determine if home ownership and the obvious stability that goes with it, has a causative relationship to lower crime and better students.  How do you come down on these issues?  Should government just get out of the way?  Should we study the effects of both more?  Do you believe that owning or renting is significantly better for society?

Also read:

Tuesday, October 30, 2012

Perfect Strom to Also Hit Mortgages in January 2013

Mortgage Lenders See Tighter Credit Under New U.S. Rules - Bloomberg News Headline

Regulation of the financial sector is a big issue in the current election.  The Democrats led by President Obama have successfully past massive reforms on lending effecting everything from credit cards to mortgages.  The regulations being spun out of these bills have already effected the ability of consumers to borrow.  New regulations expected to take effect on January 1 may interrupt the fledgeling housing recover, and thus the overall recovery.  Is this round of additional restrictions necessary?  Or do the Republicans, led by Governor Romney, have it right when the complain that these regulations on mortgage lending are too much and way too soon?

The Forbes article specifically point to two new regulations:
Regulators are preparing to release the language of two rules taking effect in January to set standards for non-abusive lending and require banks to hold a slice of risky mortgages on their books. In addition, U.S. banking overseers must also complete new capital standards mandated in the international Basel III accords next year.
The housing rules, coming almost simultaneously, may overlap or conflict, creating what National Association of Realtors President Maurice “Moe” Veissi called a “perfect storm” of regulation.
“There’s this intersection of policies that are absolutely not being considered by this massive array of institutions, all involved in deciding the future of homeownership and rental opportunity,” David Stevens, president of the Mortgage Bankers Association, said in an Oct. 22 speech at the association’s annual conference in Chicago.
 One might also ask, even if these regs are good public policy, would it be smarter to hold off on their implementation until the business and housing climate improves?

For consumers considering a new home mortgage or home refinance, this might be one more reason act quickly, especially if their credit score, down payment, and income place them on the cusp of eligibility. 

Monday, October 29, 2012

Fact Check: Who Wins and Who Loses When Next President Ends Mortgage Interest Deduction

The Mortgage Interest Deduction Will End 

It is all but certain Congress will eventually eliminate the much loved and historic mortgage interest deduction

Unbiased and Complete Coverage of Pluses and Minuses of Mortgage Interest Deduction

Since it seems so likely that this sacrosanct tax deduction is going away in the next year or so, it is odd that so little of substance has been written about the pro's and con's, winners and losers, and potential consequences both obvious and subtle.  It will be the goal of this blog to cover every detail of the debate over the mortgage interest deduction with clear eyes, and with the intention to remain unbiased.  In fact, the basic contention of the series will be that the math for the most likely proposals results in surprise benefits for some who may not think they like the idea of eliminating the subsidy, and surprise losses for some who might be supporters of the new approach.

Join the Discussion About the Future of the Mortgage Interest Deduction

Here is a list of the complete series of blog posts we have created on this issue.  Hopefully you will find them informative and even handed. 

Three fourths of the homes effected by any reduction or elimination of the mortgage interest deduction are in blue states.  Check out the facts.

 Will you be effected if the mortgage interest deduction is eliminated?
Are you curious about the effect of any change in the home mortgage deduction on your taxes?

Home Values of those effected by ending the Mortgage Interest Deduction Could Drop by Hundreds of Thousands of Dollars.  Is that fair.

Capping the Schedule A Deductions Might be More Fair than Eliminating the Home Interest Deduction

Could Ending the Home Mortgage Interest Deduction Send Another Horrible Shock Wave Through the Economy?

Ending Home Mortgage Interest Deduction Could Give US Government $1.2 Trillion in Revenues over the Next Decade

What Are Options to Ending the Home Interest Deduction

What Are the Reasons or Benefits Associated with Ending the Home Mortgage Interest Tax Deduction?

What Are the Benefits to Homeowners and the Real Estate Industry of Keeping the Mortgage Interest Deduction

What are the Societal Benfits of Keeping the Home Interest Tax Deduction

Contributors to the content come from the center left and center right of the political spectrum, and experts will be sighted throughout the posts from dozens of thoughtful commentators in finance, business, academia, and from every point of view.  In order to maximize our goal of getting it all on the table, we hope that you will bring your opinions to the comment section, and that if you have credentials and would like to write a guest column, please contact us with your proposal. 

Thursday, October 25, 2012

Housing market and economic recovery- refinance expert Los Angeles

News for those looking to buy or refinance in Los Angeles
A number of recent conditions in the housing market have some experts predicting some economic upswing. The housing market was an integral part of the economic crisis, and the market has continued to be sluggish in its recovery, though some think that is changing now. This from Dailyfinance.com: 

Positive indicators 
According to a report from the U.S. Commerce Department, new-home construction this year is likely to contribute to economic expansion for the first time in seven years. In the first and second quarters, residential construction added 0.4% and 0.2%, respectively, to U.S. GDP

According to CoreLogic, a leading provider of housing information and analytics, nationwide home prices rose 4.6% year over year in August, representing the largest annual gain in six years. And inventory of for-sale homes is currently at a 5.9-month supply, the lowest since March 2006. Not bad given that a six-month supply is usually considered a healthy inventory level.
Year-over-year nationwide home prices and sales of new homes have risen meaningfully, while inventories have declined markedly. Supply is finally starting to come in line with demand. See more of this article at Dailyfinance.com....

Tuesday, October 23, 2012

Mortgage rates dropping again: refinance los angeles

Los Angeles mortgage rate expert Bill Rayman keeps this blog updated with latest mortgage rate news.

The Global Newswire brought the following mortgage news about rates, which have fallen slightly since last week: 

SEATTLE, Oct. 23, 2012 (GLOBE NEWSWIRE) -- The 30-year fixedmortgage rate on Zillow® Mortgage Marketplace is currently 3.28 percent, up two basis points from 3.26 percent at this same time last week. After peaking at 3.35 percent on Friday, the 30-year fixed mortgage rate dropped and hovered between 3.27 and 3.3 percent over the weekend, dropping to the current rate this morning.
"This past week, rates moved up slightly on optimism about the Eurozone's recovery and improving U.S. economic data," said Erin Lantz, director of Zillow Mortgage Marketplace. "Although Wednesday's Federal Open Market Committee announcement has the potential to move markets, we don't expect policy changes that would move markets out of the flat sideways pattern in the coming week."
Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgage Marketplace site, and reflect the most recent changes in the market. These are not marketing rates, or a weekly survey.
The rate for a 15-year fixed home loan is currently 2.65 percent, while the rate for a 5-1 adjustable-rate mortgage(ARM) is 2.51 percent.
Below are current rates for 30-year fixed mortgages by state. Additional states' rates are available at: http://www.zillow.com/mortgage-rates.

Up to date mortgage rate information comes from Zillow.com's Market Place, where lenders submit data which is averaged in real time.

Thursday, October 18, 2012

Today: Mortgage rates plummet again- Los Angeles refinance

Los Angeles mortgage rates expert Bill Rayman brings you the latest mortgage news updates on this blog.
In today's news, from NBC news wire reports:

"The average U.S. rate on a 30-year fixed mortgage has fallen to near its record low set earlier this month.
The rate on the most popular mortgage dipped to 3.37 percent from 3.39 last week, mortgage buyer Freddie Mac said Thursday. Two weeks ago, the rate reached 3.36 percent, its lowest level on records dating to 1971.
The average rate on the 15-year fixed mortgage, often used for refinancing, set a record low of 2.66 percent, down from last week's 2.7 percent.
Cheaper mortgages are helping fuel a modest but steady housing recovery.  
"Mortgage rates remained more or less unchanged this week as home construction builds up steam," said  Frank Nothaft, vice president and chief economist, Freddie Mac. "Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year," he added."

Tuesday, October 16, 2012

Home Loan waiting period: How long?

Waiting for final approval on your conventional home purchase loan, refinancing loan, or FHA loan in Los Angeles is always difficult. The technical period of time designated for this is 30 days, but it can stretch longer than that particularly with the purchase of a home, for reasons Bill Rayman explains in this short video. 
Timing is everything in buying your home, and this hurry-up-and-wait process can be a source of real anxiety for the buyer. In this video, Bill explains what might cause your waiting period to be longer, and allays some common concerns about this. 
In California in particular, inventory of lower-priced homes has been drastically reduced due to high competition, as reported by the Los Angeles Times on Friday. This high competition can make waiting periods more stressful for buyers in this market, who may have a hard time finding an affordable home even if they qualify for a loans.

Sunday, October 14, 2012

Will impounds save you money? Los Angeles Mortgage broker explains pros and cons

In this short video, Bill Rayman, Los Angeles FHA loans, mortgage rates, and refinance options expert, discusses the benefits and drawbacks of impounds, also known as escrow accounts. 
An impound account is set up to pay your annual property taxes and insurance for you. The account collects 1/12th of the cost of your taxes and insurance each month, so you do not have to worry about paying all at once. Bill explains how it may help you to secure a lower interest rate on your loan. It can be cancelled anytime without penalty.
If you want to be in charge of your own decisions with the help of a mortgage broker who can help you understand the mortgage business and weigh your options, Bill Rayman is a trusted resource in the Los Angeles area. 
Bill will lay out your options for you in common language, and help you find the best solutions for your specific situation, so you can increase your financial security and freedom. Give us a call today and we will help you problem-solve or choose the next steps forward.

Friday, October 12, 2012

Low mortgage = high competition in Los Angeles

We consult with many clients seeking FHA loans in Los Angeles, often to purchase their first home. FHA loans are a good option for buyers who qualify for their desired mortgage, but may only have a small down payment.  Of note to first time homebuyers is this mortgage news article from the Los Angeles Times today: 
"Competition for lower-priced homes in California is so hot that the number of cheaper homes available for sale has sunk more than 40% in the last year, pushing out many would-be buyers.
Homes that sold for $313,200 or less were the most competitive type of home nationally, but nowhere did inventory in that price range drop more than in the Golden State, according to a report released Thursday by real estate website Zillow."
If you need expert advice on how to get an edge in today's most competitive California home buying market, contact Bill Rayman. Bill is an independent mortgage broker and lender. He brings years of experience in the lending market, and works directly for his clients, not for a bank. If you are a first time homebuyer interested in an FHA loan or traditional mortgage loan, contact Bill Rayman today.

Consumer debt crisis? Refinancing to consolidate

Many consumers do not know they may be able to consolidate debts through home refinance (in Los Angeles, contact Bill Rayman). Are you overwhelmed by debts from auto loans, personal loans, credit cards, or other debt? Many people today are paying high interest rates on their debts, when they could be getting a much lower interest rate by refinancing their home. If you have gotten overwhelmed with your debts or unexpected expenses, consolidating your debt and refinancing may help you get on your feet again. As a mortgage broker in Los Angeles, we can help you make the sound financial decisions that will get you back on track.

As a mortgage broker in Los Angeles, we can help you look at all your financial options. We can often help clients who thought there were no options available to them. With smart financial planning, and a strong advocate on your side, (we work for you, not the bank) you can find the way to move forward into financial freedom.

Friday, September 28, 2012

Your real credit score: don't be fooled! Los Angeles refinance expert explains

In this short video, Bill Rayman, Los Angeles refinance and mortgage expert, exposes some of the common myths about credit scoring. How do credit reporting agencies really operate? How is your credit score calculated? Why is one credit score sometimes different from another one? How do you protect your credit from mistakes, fraud, and identity theft? 
Bill Rayman answers all these questions and explains what information you need in order to be an informed and empowered consumer, and where to obtain that information. He explains what knowing your credit score does and does not do for you, and what is more important to the consumer than a credit score. 

Wednesday, September 26, 2012

Trapped in your home? Los Angeles mortgage rate expert explains your options

In this 13 minute video, Los Angeles mortgage rate expert and broker Bill Rayman addresses home owners who feel they are trapped in their homes, either because they are underwater, or don't have enough equity to refinance or sell.
If you feel you are stuck under a mortgage you don't want, Bill Rayman can help you navigate different strategies that may help you to purchase the home you want. 
Perhaps you've been following mortgage rate trends on our blog, or elsewhere, and are wondering how you can take advantage of the historic low mortgage rates. Bill lays out some of the lesser known strategies and opportunities available to many homeowners in Los Angeles.
If you have had a bad experience with a bank, do not give up hope. A mortgage broker can often help you find loans you qualify for, even when a bank has turned you down. Bill Rayman works for his client's best interests, not for a bank. Give him a call to see if he can help you reach your goals for a mortgage in Los Angeles.

Monday, September 24, 2012

Record lows this week: mortgage rates Los Angeles

Our Los Angeles broker posts mortgage rate news every week. This week, mortgage rates hit a new record low when 30-year fixed mortgage rate averaged 3.49%, down from 3.55% the week prior. The average 15 year fixed mortgage rate fell to a record of 2.77%, from 2.85 percent.
On Thursday of last week, mortgage rates plummeted to the lowest rate on record, responding to action from the Federal Reserve intended to stimulate the housing market. The Federal Reserve revealed last week its plan to purchase $40 billion per month in mortgage-backed securities. The hope is that this will stimulate job creation and lower the cost of borrowing. 
The real estate market is expected to be recovering after more than three years of declines. Home sales rose to a two-year high in August, the National Association of Realtors reported on Wednesday. Single-family housing starts advanced at the best rate since April 2010, the Commerce Department said.

Saturday, September 22, 2012

Home Equity Loans explained...understand mortgage rates and loans in Los Angeles

Bill Rayman, expert on Los Angeles mortgage rates, explains Home Equity Loans, also called HELOC in easy-to-understand language. Bill Rayman is a Los Angeles mortgage broker, who can offer information and consultation services to assist you in determining if this specific type of loan, or another type of mortgage loan may be the best option for your specific situation and goals. 
Bill Rayman helps Los Angeles area home buyers navigate the market, analyze their financial situation, and find the best rates available. Give him a call today to learn how to make the most of your mortgage investment. 

Tuesday, September 18, 2012

Warning: Mortgage Fee Hikes Ahead? (mortgage rates Los Angeles)

A new report expected this week may be a new factor affecting borrowers concerned with Los Angeles mortgage rates. Federal housing regulators are expected to release a report that may reveal new mortgage fees ahead. 
The Federal Housing Finance Agency may be modifying the way it calculates fees that guarantee credit risk to depend on state-specific default risk. Last month Fannie Mae and Freddie Mac increased the guarantee fee they charge to investors that back the bonds they sell. The fee went up by an average of 10 points.  The fee changes are intended to limit the credit risk associated with mortgages, after costing taxpayers $188 billion. 
The FHFA is releasing a study and seeking input about the possibility of imposing upfront fees in states where risk is higher than the national average. The fee is designed to equalize regional differences in the pricing of mortgage guarantees. This revision, if implemented, will mark a major change in the way the guarantee fee works.

Monday, August 27, 2012

What is a mortgage broker? Best mortgage rates in Los Angeles

Bill Rayman, Los Angeles Mortgage Broker
How can our broker help you get the best mortgage rates in Los Angeles?
A mortgage broker is a company that has relationships with lenders in much the same way that an independent insurance agent does with many different insurance providers. These relationships allow mortgage brokers to receive offers of mortgages at wholesale prices. As a result, brokers can offer lower rates, often the lowest on the market. By going with the lender offering the best rates on a particular day, the mortgage broker helps their clients get more for their money.

The broker may also choose to operate on lower margins or profit than banks and lenders. Good brokers remain up-to-the-minute on on an array of products from their providers. Direct lenders have only a limited number of loan products available.

The broker handles all of the processing of the loan. Since Mortgage Capital funds most of its own loans, it usually underwrites them as well.
At a traditional bank, the employees work for the bank, not for you. As a result, in difficult situations a direct lender is likely to just turn you down, and leave you on your own to solve the problems. Experienced brokers have a fiduciary responsibility to their client and will work to find a way to meet their needs.

Saturday, August 25, 2012

What is short pay refinance?

Bill Rayman, Los Angeles refinance expert discusses short pay refinance.
If your credit is good, and you are underwater on your mortgage, you are probably wondering what options are available to you. Do you have to short sell your house? Do you have to foreclose? What about loan modification? Do you qualify for government bailout help? For some home owners, none of the traditional options seem to offer an adequate solution. Many throw up their hands and walk away from the home they worked for.
Short pay refinance may be an option for home owners who are under water and want to protect their credit. This option is not well known, but Bill Rayman can help you understand if this is the right option for you, how it works, and get you started on moving forward with this process.
In this 9 minute video, Bill Rayman explains short pay refinance in common language. If you want to know more about this and other options to refinance in Los Angeles, contact us today.

Tuesday, August 21, 2012

Mortgage rates up this week: mortgage rates Los Angeles

As experts on the mortgage rates in Los Angeles, we regularly post updates on our blog to keep our clients informed about current national mortgage rate trends. For many weeks this summer, that trend has been a pretty steady decline. This week showed a change, as real estate website Zillow today reported that there has been a rise in the last week. 
This week, Zillow's user-submitted data showed that the 30 year fixed mortgage rate rose to 3.5% from 3.42% last week, reaching its highest point in 10 weeks. The rate hovered between 3.4% and 3.6% throughout this week, settling at it's current rate this morning. 
Zillow reported the rate on Mortgage Marketplace for a 15-year fixed home loan was 2.82%, up from 2.76% a week earlier. The rate for a 5-1 adjustable-rate mortgage slipped to 2.38% from 2.4% last week. A 5-1 ARM has an initial rate that applies for the first five years of the loan and then adjusts annually.