For many homeowners, one of the factors used in determining whether they can afford a specific home is the interest rate for their mortgage. A lower interest rate usually means that a borrower can afford to purchase a more expensive home because lower interest rates mean lower mortgage payments. A higher interest rate makes a California mortgage more expensive, thereby decreasing the purchasing power of a borrower. However, because of California’s housing crisis, lower mortgage interest rates may not help some borrowers afford even a modest home. This is why you don’t want just a rate quote from a bank.

California’s Housing Crisis

The cost of a home in California has been steadily increasing for years. Some experts place the rapid rise in the cost of housing as one of the top concerns for state lawmakers. Throughout California, residents are faced with the problem of how to afford a house payment on entry-level incomes or incomes that are much too low to afford the house prices in their area. Because of the sharp gap between the increase in income and the increase in the cost of a home, many people simply cannot afford to purchase a home.

In many cases, borrowers who may be able to afford the mortgage payments for a home cannot come up with the down payment for the home. An indication of this problem can be seen by the applicants seeking down payment assistance through CalHFA. CalHFA’s mission is to help low-income and moderate-income families purchase their first home. However, the substantial increase in the cost of a home has caused the agency to redefine what it considers low to moderate incomes. The median income for qualifying for assistance from CalHFA is increasing as the cost of homes in California increase. Even borrowers earning six-figure incomes do not have the savings they need for a down payment.

Can Lower Mortgage Interest Rates Make a Difference?

Even as the cost of a home continues to increase sharply in many areas throughout California, mortgage interest rates are lower. Can the lower mortgage interest rates help solve California’s housing crisis? Only time will tell whether lower interest rates will improve California’s housing market. However, for some borrowers, the lower mortgage interest rates mean they can afford to purchase their first home or purchase a more expensive home.

It is unknown how long interest rates will remain low. Therefore, if you have been considering purchasing a home or refinancing a current mortgage, it is important to explore your options for a California mortgage. Lower interest rates may make it possible for you to qualify for a loan because your debt-to-income ratio with the new mortgage payment will be lower because of the lower interest rates.

Some financial experts believe that interest rates for mortgages will likely increase throughout the year despite the temporary decrease. Therefore, if you are interested in a California mortgage, now is the time to apply while interest rates are lower than they may be toward the end of the year. Call today at (619) 692-3630 to schedule your personal consultation with California Community Mortgage.