May 27 2020
May 27 2020
May 27 2020
Southern California real estate is expensive. So when shopping for home loans in Los Angeles, you want to be sure to get the best mortgage rate possible. When you're paying a million bucks for a home – or even half a million – a fraction of a percent in your mortgage rate can add up to a big difference over time. It even adds up for more modestly priced homes as well.
Jumbo loan rates – Los Angeles
Because real estate prices there are so high, many buyers end up having to get a jumbo loan in Los Angeles. A jumbo loan is one that exceeds the limits allowed for a loan backed by one of the major government-affiliated agencies – Fannie Mae, Freddie Mac, the FHA or VA. These are often called conforming loans, because mortgages backed by them must conform to certain requirements, including the maximum loan limit.
In Los Angeles County, the jumbo loan limit is $679,650 (2018) – the highest allowed in the contiguous 48 states. That's the maximum you can get with a conventional loan; anything above that requires a jumbo mortgage.
The requirements for a jumbo loan are tighter than for a conforming loan. You need to have good to excellent credit and usually have to put down a larger down payment that you can use for a conforming loan. Jumbo mortgage rates in Los Angeles and elsewhere are tied to your credit score and the size of your down payment – you can still get a jumbo loan with a sub-680 credit score or a down payment of less than 20 percent, but you'll pay a higher rate than someone who puts down 40 percent and has an 800 credit score.
Shopping for home loans in Los Angeles
Refinance mortgage rates, like regular mortgage rates, are tied to your credit score and how much equity you bring to the deal. In fact, there's not much difference between Los Angeles refinance mortgage rates and mortgage rates for buying a home in L.A. As far as the lender is concerned, they're both home loans.
What will make a difference is your credit score and the amount of equity you bring to the deal. Borrowers with excellent credit and 20-40 percent home equity (or a large down payment) get the best refinance rates. If you have flawed credit or low equity, you might consider a FHA refinance, because those rates are less sensitive to those factors. However, refinancing with the FHA would be subject to the same Los Angeles jumbo loan limit - $679,650 – as a regular home loan.
Comparing Los Angeles mortgage rates
To get the best mortgage rates on a home purchase or a refinance in Los Angeles, you need to shop around. Each lender structures their loans differently, and fees and rates can vary quite a bit.
You want to compare rates and fees from at least three mortgage lenders, and maybe more. Don't fixate on the mortgage rate alone – loan fees, and discount points in particular, can make a big difference in the rate a lender offers and what you pay over time. A loan with a seemingly low rate and a couple of discount points can end up costing you more than a loan with a higher rate and no points. Look at the total cost.
You can shop around by calling lenders individually and asking them what rates they'd offer a borrower with your credit and financial profile. You can also request quotes online by using a rate request form such as the one at the top of this page, which will get you personalized quotes from multiple lenders based on some basic information about you and the loan you are seeking.