Home Loans in Orange County Far Above Being Underwater

Fewer underwater mortgage holders, but Las Vegas still at the top of the mountain.  The share of Las Vegas homeowners who are underwater continues to move downward, but it continues to be the highest of all large U.S. cities. As of January, 2016,  22.1 percent of Southern Nevada homeowners with home loans owe more than the property is worth.

Even with the improvement, Las Vegas’ current share of upside-down borrowers was highest among the 35 metro areas listed in the report.  In contrast, 13.4 percent is the rate across the country, and Silicon Valley in California, San Jose has the lowest rate among homeowners underwater nationally, with only 3 percent.

home loans below their value

To sell their home, upside-down borrowers typically have to do a short sale, an often time-consuming, paperwork-heavy process in which their lender agrees to sell a house for less than what’s owed on the mortgage. Such deals are by no means guaranteed to be approved, though.

According to a new study by SmartAsset using data from the Mortgage Bankers Association and Bankrate, San Joaquin County is one of the top 10 best places in California in which to get a mortgage. San Joaquin County surged substantially from its ranking last year at 53.

Other counties in the top 10 list were Inyo, Alameda, Orange, Madera, Glenn, Trinity, San Mateo, Marin and Alpine.

To determine the best places in the country to get a mortgage we looked at four factors: overall borrowing costs, ease of securing a mortgage, cheap property taxes and cheap annual mortgage payments. On the oppsite end, there are existing homeowners in areas of California where getting a mortgage is not so easy.

For underwater borrowers, a great solution is to refinance into a new mortgage with the goal of lowering your monthly payments, reducing your interest rate, or switching your loan from an adjustable rate mortgage to a fixed-rate mortgage. Most of the time there is no requirement to have equity in your home if you qualify for the few dedicated underwater refinancing programs that launched during the last few years.

The Home Affordable Refinance Program, also known as HARP has been extended until the end of 2016.  According to mortgage data in California, there’s greater than 31,000 homeowners who are eligible for the program but haven’t applied.

However, statistics from FirstTuesday,  show the number of California homes with negative equity fell to 457,000 in the third quarter (Q3) of 2015. The share of homes with negative equity is at 6.8%, down from around 9.3% the previous year.   That translates to one in fifteen California homeowners who have a mortgage that is underwater.

Diving deeper into the date shows a large percentage of homes with negative equity are located in the inland regions.  The Riverside-San Bernardino-Ontario area has the highest percentage of negative equity in California, with 11.4% of mortgaged homeowners underwater. On a positive note, Orange County had the smallest percentage of underwater homeowners with just 2.5% .

Qualifying rules require the following: a mortgage must have been originated prior to the program’s launch in 2009, the current mortgage balance needs to be within 80% of the home’s value, and the borrower needs to have credit that shows little to no late payments.

—  FHA also allows underwater refinancing whereby they’ll forgive a minimum of 10% of the borrower’s starting mortgage principal. Applicants that are eligible need to owe a minimum of 15% more on the property than it’s actual market value.  The borrower must use the property as their primary residence and have at least a 500 credit score.