Bank of Hope Hope Stories Los Angeles Mortgages - Loan Rates and FAQs

Peter Park Apr 17, 2024

SVP, National Sales Manager-Mortgage Banking

Navigating the housing market in Greater Los Angeles poses unique opportunities and challenges, reflecting the distinct characteristics of Southern California. For example, specific communities within the region are expected to soon experience some of the country’s most dramatic leaps in sales growth. Many LA home buyers must contend with localized considerations, like asking prices and insurance costs that are both well above the national average.

The key lesson is not to perceive homeownership as an unattainable dream. Instead, such news stories emphasize the importance of adopting a carefully planned financial strategy. Recognizing the need for a nuanced approach, prospective homebuyers in Southern California should consider working closely with a lender who possesses in-depth knowledge of the local market's nuances and fluctuations. This ensures a well-informed decision-making process and helps tailor financial strategies to the specific challenges and opportunities presented by the Los Angeles housing market.

Enter Bank of Hope – a mortgage lender deeply rooted in the fabric of Los Angeles that is well-equipped to guide homebuyers through the intricacies of the mortgage application process. By offering not only financial expertise but also insights into the unique factors influencing the Southern California real estate landscape, Bank of Hope can be a valuable partner for individuals aspiring to invest in a new home.

Visit our Mortgage page or connect with an LA-based loan officer

Mortgage Rates in the Greater Los Angeles Area

Home loan rates can vary day-to-day, person-to-person. However, LA residents can expect mortgage rates comparable to:

Home Mortgage Loans | Bank of Hope

The specific mortgage rate LA home buyers will be offered depends upon a number of individualized factors, including:

Your credit history - A higher credit score often leads to lower interest rates, as it signals to lenders that you pose less risk, making you a more attractive borrower and potentially saving you money over the life of your mortgage. To understand whether you have a “good” credit score and what steps you can take, read Get to know (and raise) your credit score.
Your debt-to-income ratio - LA mortgage companies don’t want you to fall behind on payments or default on loans. Therefore, they evaluate whether or not they think you can afford the hypothetical mortgage payments by assessing your other debts, including car and student loans, owed credit card payments, child support, and other recurring financial obligations. Typically, if the debt (including your mortgage) consumes at least 42% of your income, LA mortgage companies may be hesitant to provide a loan.
The size of your down payment - Regardless of whether you apply for a mortgage in Los Angeles or elsewhere, your down payment will have a direct impact on your monthly mortgage payment. Firstly, a larger down payment results in owing less money, leading to reduced regular payments. What’s more, if you pay at least 20% of the home’s price as a down payment, buyers can avoid having to pay private mortgage insurance (PMI).

Bank of Hope can assist Los Angeles homebuyers in navigating the mortgage application process, providing guidance tailored to their specific circumstances. Beyond offering extensive knowledge of mortgages and the LA housing market, we can also help in developing a comprehensive budget that takes into account future renovation expenses, moving costs, and overall saving and investment objectives.

Get to Know Bank of Hope - A Close-to-Home LA Mortgage Lender

Based in Los Angeles, Bank of Hope has been dedicated to serving the needs of Korean Americans and other Los Angeles residents for over four decades. Despite our expansion into a national chain, our commitment to fostering the expertise of our mortgage specialists focused on LA remains unwavering. We actively cultivate a customer-first culture, ensuring that our California customers are not only guided through the loan process by industry-leading experts but also receive a world-class experience. This dedication to excellence sets us apart, as we continuously strive to provide personalized and top-tier service to our valued clients throughout the mortgage journey.

Visit our Mortgage page or connect with an LA-based loan officer

FAQ About Home Buying & Mortgages in Los Angeles

What is the average mortgage payment in Los Angeles?

As is true of every location, the average mortgage payment in Los Angeles will vary based on both local and national influences. However, as of the beginning of 2024, Business Insider estimates that LA has a median monthly home payment of $3,239, a higher figure than New York, San Diego, Chicago, and almost all other US cities.

Does the LA housing market experience seasonality?

When observing the housing market at a national level, summer months rule supreme. However, Los Angeles experiences near-opposite trends with winter and spring months being the most popular time to buy or sell a house.

What are property taxes like in Los Angeles?

When budgeting how much “home” you can afford, it’s crucial to not only consider the monthly mortgage but also the regular property taxes you’ll pay on your LA home. The average tax for LA County is estimated to be 0.82%, but this number changes for neighboring areas; for instance, Ventura County is 0.78%, while Riverside County is about 1.04%. The good news is that many LA mortgage lenders will handle taxes on your behalf; you pay a consistent amount into an escrow that the company then uses to ensure your property tax obligations are fulfilled.

It’s important to recognize that taxes are subject to change, whether based on new assessments of the property’s value or policy changes. For example, in 2022, Los Angeles implemented Measure ULA, commonly referred to as the "mansion tax." The mansion tax entails a 4% levy on property transactions surpassing $5 million and a higher 5.5% rate for properties sold at or above the $10 million mark.

Our point is that LA homeowners should anticipate taxes gradually increasing with time and, therefore, consider this when determining what type of mortgage they can afford.

What should homebuyers know about homeowners' insurance and potential risks specific to the Los Angeles region?

Not unlike with mortgage rates, Los Angeles homeowners tend to face higher insurance rates than others throughout the country. One contributing factor is that some companies refuse to sign new policies throughout all of California due to the threat of wildfires and other natural disasters that also contribute to the increase in insurance rates.

For local advice specific to Los Angeles homeowners, we recommend following the tips set forth by NBC Los Angeles.

Is it better to buy a house or a condo in the Los Angeles area?

Firstly, there is no clear-cut answer as to whether houses or condos are preferable for aspiring LA homeowners. Individuals who feel financially intimidated by the average monthly Los Angeles home payments of $3,239 mentioned above may discover that condos offer an attractive alternative, as they often come with a more affordable price tag compared to traditional houses. But, beware, HOA dues can increase with time. What’s more, generally speaking, the value of condos doesn’t rise as quickly as those of single-family properties.

Is it cheaper to buy or rent in the Los Angeles area?

When comparing the average monthly mortgage of Los Angeles against the average rental rate, rental rates are overall cheaper (as of early January). This is especially true if you don’t have a large lump sum to put as a downpayment. However, don’t discount the idea of buying in LA, outright, as key considerations include:

A fixed-rate mortgage will stay the same, even 30 years from now. Alternatively, rents tend to only go up and up.
Part of the reason home buying is expensive is the current mortgage rates; buyers can choose to refinance at a later time if lower rates are available.
With each mortgage payment, you earn increasing equity in the home. The longer you stay in your LA house or condo, the more money you’ll personally receive when selling.

Want to Learn About Acquiring a Mortgage in the LA-Area and Beyond

The process of acquiring a mortgage is often accompanied by a slew of questions. To help you navigate the home buying and financing journey, we wrote:

And, don’t forget, the Bank of Hope team is readily available to provide additional insights into the LA mortgage landscape.

Learn more about our Mortgage experts and services.