Los Angeles Living

A recent article in the Los Angeles Times addressed the interesting topic of whether you should pay off the mortgage on your home early.

In today's roller coaster ride on the stock and housing markets people are worried about their monthly expenses. There is no security in holding the debt of a mortgage on a Los Angeles home when there are few if any options to make easy money to cover that mortgage. In high times you knew you were covered by the growth in home equity and the booming stock market.

It would seem tempting to pay off that loan on your Los Angeles home, hoping that by the time you get to retirement you will be free and clear. Or you just don't like making those monthly payments. Before you decide, here are some reasons to consider before paying off that mortgage:

Financial considerations

• Do you have credit card debt, maybe a car loan? Those should be addressed first, especially the high interest ones.
• If you pay off the mortgage do you still have 6 months living expenses in cash?
• Do you have money put aside in case of emergencies?
• Money pulled out of a non-Roth IRA will be taxed at ordinary income rates so, unless you are retired or in a low income bracket, this would be counter-productive.

How long do you intend to stay in your Los Angeles home?

If you think you may move in the next few years, certainly don't pay off the mortgage. Market conditions being what they are, you don't want to be stuck with a home that is paid off and on which you may not be able to get all your money out.

Is it worth the interest deduction any more?

At the beginning of the mortgage your tax deduction is going to be higher. As you start to pay off the principal the savings are less. And, if you are nearing retirement, or retired and close to the end of your mortgage payments, then the tax deduction should not stop you from paying off your Los Angeles mortgage, especially since your tax bracket is most likely going to significantly reduced.

Calculate your return on investment

Based on your tax rate and the present low mortgage interest rates, what is your return if you pay that loan off? Is it 3%, 4%, more? Where can you get a higher rate of return if you invest that money? Do the math! Your accountant should be able to help you decide. But bottom line, it is about your comfort level. Some people don't want to be burdened with monthly payments of any kind, and if you have the money burning a hole in your pocket.....

Buying or Selling Los Angeles Real Estate

Buying or selling a Los Angeles home can be a daunting process in a city this size, especially if you're new to L.A. Town. You'll need a resident expert to show you around and help you narrow down the areas where you might like to live. I will help you find the perfect home in the right area to fit your lifestyle, budget and needs! When I list and sell Los Angeles homes for my clients I strive to make the experience a pleasant one. My mission is to provide outstanding service while utilizing the best practices and systems available. If you are an absentee owner, you'll need someone to handle all the details that you can't handle remotely. That's where I come in - I'm there when you can't be. I also specialize in lease property in Los Angeles. Westside Los Angeles Real Estate, including, but not limited to:

• Westwood Real Estate - Westwood single family homes, Westwood condominiums, Wilshire Corridor condominiums, Century City condominiums
• Brentwood Real Estate - Brentwood single family homes, Brentwood condominiums
• Santa Monica Real Estate - Santa Monica single family homes, Santa Monica condominiums
• Beverly Hills Real Estate - Beverly Hills single family homes, Beverly Hills condominiums
• Culver City Real Estate - Culver City single family homes, Culver City condominiums
• Palms/Mar Vista Real Estate - Palms/Mar Vista single family homes, Palms/Mar Vista condominiums
• Silver Lake Real Estate - Silver Lake single family homes, Silver Lake condominiums
• Echo Park Real Estate - Echo Park single family homes, Echo Park condominiums

For more information on how I can best serve your Los Angeles real estate needs, please fill out the online contact form or give me a call at 310-473-6919.

The Neighborhood Assistance Corporation of America (NACA) is going on the road to help people avoid foreclosure.

The latest event is happening now at the Los Angeles Convention Center.  The purpose is to help people reduce their mortgages to 2-3%.

NACA has been traveling across the county and attracting crowds of around 30,000. Judging by one woman's comment in the video they have had success.

Next stop is Sacramento.

If you are thinking of buying a home in Los Angeles, or anywhere for that matter, wait until you have closed escrow and are in your home before you apply for more credit.

The lender may run a full credit screening before funding the loan and they could find that your debt has increased to a level where you will not be able to afford your monthly payments.

Read more on Last Minute Credit Screenings

I was recently introduced to Broadview Mortgage, a lender in California who specialize in CalPERS loans, public employees and CalSTRS loans, employees of public schools and community colleges. They have recently added a new loan to their portfolio, healthcare workers.

This is an exciting new opportunity for almost anyone in the healthcare field to obtain an affordable loan.  The category is broad - medical receptionist, physicians aid, ambulance driver, physical therapist etc.

If you have any questions, especially if you would like to know if you qualify, please let me know. I would be happy to put you in touch with the appropriate party.

Below is an outline of eligibility for the three loans:

This is an overview of the actual loan:

Visit my website for more details of this loan.

Buyers, this is an excellent post to help you educate yourselves the actual costs involved in the purchase of your new home.

Contrary to what one would think would be common sense, the less you put down on a house, the less your interest rate is going to be. 

Why?

In their infinite wisdom Fannie Mae and Freddie Mac. the underwriting gurus of most of the nation's loans, have determined that down-payments of 20-25% which are not insured by Private Mortgage Insurance (PMI) are high risk. Down-payments of over 25% receive lower interest rates. Loans covered by PMI remove the foreclosure risk to lenders.

As an example, in late August a buyer putting down $80,000 on a $400,000 house could have qualified for a 4.875 rate on a 30-year fixed mortgage. This rate was offered to borrowers only putting 5% down. Those who put down 25% got an even higher rate, 5.375%. 

Those putting down less have more in their pockets to take care of repairs, cover emergenciecs, etc. And, when there is 20% equity in the home the PMI will no longer be required.

However:

In today's market some lenders are not releasing borrowers from the PMI requirement.

Also, the monthly payments are going to be higher for those putting down less.  Example: 25% down on a $400,000 house will require payments of $1,6870 a month. 15% down means payments of $1,906 – $1,799 in principle and interest and $107 in PMI. The PMI is tax deductible, so depending on the borrower’s financial status, the net mortgage cost could be less.

It is advisable to put more down and build on your equity.