How to Lower the Cost of Housing in Channel Islands Harbor

October 11,2021 | Posted By Arlene Beckwith in Real Estate
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Amidst the COVID-19 pandemic, it is no secret that housing costs are among the top concerns for Channel Islands Harbor residents and individuals looking to relocate to the neighborhood. But what you probably do not realize is that you can save an incredible amount of money annually by purchasing a house. Wondering how? Read on to learn more.

The Secrets to Lowering Housing Costs in Channel Islands Harbor?

Home prices are rising across the USA; Channel Islands Harbor registered an approximately 5.4% increase in home prices in the past year, thanks to the growing population and housing demand.

Fortunately, the mortgage payment in today's market could be less than the rent the tenants are paying which is a significant factor of the savings. The 30-year fixed-rate mortgage is projected to float around 3.03% through 2021, and homeowners can rest assured they will spend less on monthly mortgage payments.

Suppose you bought a $300,000 home with an FHA loan at a 30-year rate of 3%. Your monthly payment, including principal & interest, mortgage insurance, home insurance, and taxes, would amount to about $2,000. If you were paying $2,500 in rent, this means you save approximately $485 monthly with the home purchase.

Now, consider a monthly principal reduction and maintenance of $500 and $300, respectively, for the first year. Assuming a 3% annual appreciation in home value, you enjoy a monthly appreciation of $750 for the first year. With these figures in mind, let us calculate the net housing cost;

Monthly Net housing cost = Payments + maintenance - principal reduction - appreciation = $1,064.

In the above example, the monthly cost of renting vs. owning = $2,500 - $1,064 = $1,436. Cumulatively, you save $17,232 in the first year.

The two other dominant contributing factors are appreciation and amortization of the mortgage, which also result in tenants prefer to purchase the property rather than continuing to pay rent.

Reach out to Arlene and Keith Beckwith, the Channel Islands Harbor real estate expert, for assistance in lowering the cost of housing in Channel Islands Harbor. Call us now at 805-338-4466 or 805-338-3363.

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How Mortgage Refinancing Can Help Cut Housing Cost

The amount you borrow with your mortgage is referred to as the principal. Part of your monthly payment goes towards paying off the principal, while another portion goes towards loan interest. The share that goes towards the principal reduces the amount owed on the loan while building your equity.

The cumulative equity becomes an asset easily accessible via a cash-out refinance, which replaces your current mortgage with a new home loan for more than you owe on your home. Let us illustrate a cash-out refinance. Suppose your home's value stands at $250,000 and your mortgage balance is $100,000. You have $150,000 of equity on your home. You can refinance the $100,000 loan balance for $160,000, and receive $60,000 in cash. You can use the cash to finance a home renovation project, cover college tuition, or consolidate higher-interest debt.

Cash-out refinancing saves housing costs in Channel Islands Harbor in two ways. Firstly, it gives you a lower interest rate if you initially purchased your house when mortgage rates were relatively higher.

Secondly, refinancing can enable you to eliminate private mortgage insurance(PMI) if your new loan balance is less than 80% of the home value. However, this tactic works if your home has gained value since the last time you received a mortgage.

The FHA is an agency within the U.S. Department of Housing and Urban Development. Popular with first-time home-buyers, the FHA loan program was created to help grow the housing market by making mortgages highly accessible and feasible for people with less than the right credit score or a low down payment due to FHA mortgage limits in Channel Islands Beach, California. Basically, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss in case of any defaulter, resulting in the lenders can offer FHA home loans at really attractive rates and with fewer formalities.



What Are FHA Loans for?

Federal Housing Administration(FHA) loans are available to moderate-to-low-income borrowers with credit scores as low as 500.

In 2020, homebuyers can borrow up to 96.5% of the home's value with an FHA loan, meaning they will need to pay a down payment of 3.5%. However, FHA requires these borrowers to have a credit score of at least 580.

If your credit score falls somewhere between 500 and 579, you can qualify for an FHA loan provided you can pay a 10% down payment. The deposit can come from savings, a grant for down-payment assistance, or a financial gift.

Note that the FHA does not actually lend you money for a mortgage. Instead, an FHA-approved lender offers you the loan. But, the FHA guarantees the loan. In case of default, FHA covers the payments, minimizing the lender’s financial risk.

How Do You Qualify for an FHA Loan in Channel Islands Harbor CA?

An FHA approved lender in Channel Islands Harbor, CA, will assess your qualifications for an FHA loan as it would a mortgage borrower. If you do not have a credit history, the lender may consider your payment records, including rent and utility payments. You can still qualify for an FHA loan if you have gone through foreclosure or bankruptcy, as long as you have re-established good credit. Check out the mortgage rates in Channel Islands Harbor and Oxnard Beach, California

Whereas there is no income limit for FHA loans, you need to prove your ability to repay the loan. But always remember that the lower your down payment and credit score, the higher the interest rate you pay.

Bear in mind that FHA-approved lenders near Channel Islands Harbor can set more stringent requirements than FHA standards. So, you may experience some hiccups with one lender- but it does not hurt to try your luck with another FHA-approved financial institution.

Get Help with Buying Your Dream Home in Channel Islands Harbor, CA

Finding your dream home in Channel Islands Harbor, CA, cannot be more convenient with the help of Arlene and Keith Beckwith-experts committed to offering superexcellent real estate services backed by decades of experience, transparency, efficiency, and client satisfaction. Call us today at 805-338-4466 or contact us online to get professional home buying-related advice. Or find a home specific to your housing needs and budget in Channel Islands Harbor.