Recently, inquiries from San Fernando homeowners considering refinancing have increased. Most are asking whether it would be better to switch loans by comparing the interest rates of loans taken out a few years ago with current rates. However, before answering this question, it is essential to first examine the current market prices and loan limits in the area. Whether refinancing or making a new purchase, the type of loan program available ultimately determines the conditions.

The housing value in San Fernando is approximately $667,787 according to Zillow, while the recent transaction price recorded by Redfin is around $732,000. San Fernando is part of Los Angeles County, which is designated as a high-cost area by the FHFA, with the core loan limit rising to $1,249,125 by 2026 (FHFA). This means that the median-priced homes in this area are slightly above half of the high-cost area limit, making them manageable even with conventional loans.

Looking at the recent market, most homeowners considering refinancing are trending towards switching to conventional loans. Conventional loans can be applied for with a credit score of 620 or higher, and those with scores above 680 can enjoy more favorable interest rate conditions. It is also worth noting that homeowners who have built up more than 20% equity can refinance without PMI.

On the other hand, for first-time homebuyers considering a new purchase, FHA loans still appear to be a realistic option. With a credit score of 580 or higher, a purchase can be made with a 3.5% down payment, and in areas like San Fernando where the median price is comfortably within the loan limits, buyers can choose properties without worrying about FHA loan limits. However, it is important to keep in mind that if the down payment is less than 10%, the mortgage insurance premium will remain throughout the loan period, which cannot be eliminated through refinancing, so it is better to factor this in from the start.

The San Fernando Valley area does not have a particularly high concentration of Korean families in its school districts, but as you move towards Granada Hills or Porter Ranch, the school district ratings tend to improve. While it is advisable to refer to ratings from GreatSchools or Niche, school district boundaries change frequently, so it is safer to verify the assigned schools for a specific address before making a purchase.

If you are moving from another state, it is easy to overlook that the property tax calculation method differs from your previous residence. In California, property taxes are based on the purchase price, and there are limits on the annual increase rate, so the longer you live there, the more stable your property tax burden becomes. When considering refinancing, it is also necessary to factor in this property tax structure and changes in insurance premiums to accurately gauge the actual monthly burden.

Investors looking at San Fernando properties for rental income are also showing an increasing trend in the recent market. However, it is important to first confirm that investment properties are not eligible for FHA or VA loans, and even with conventional loans, the down payment required is typically higher, ranging from 15% to 25%, compared to owner-occupied properties. Rather than approaching it with the expectation of capital gains, it is safer to calculate the actual return by considering rent, loan repayment amounts, and maintenance costs together.

For families preparing to settle in the U.S. after moving from Korea, the short credit history in the U.S. can negatively impact loan approval. In such cases, it may be helpful to find lenders that accept rental or utility payment histories as alternative credit data. Even if you are denied in the first consultation, other institutions may yield different results, so it is advisable to compare multiple options.

Whether refinancing or making a new purchase, it is helpful to know that each lender has slightly different criteria for assessing the debt-to-income ratio during the pre-approval stage. Even with the same income, some institutions may approve while others may impose conditions, so comparing total expenses, including closing costs, is the final verification step.

Tax and mortgage conditions can vary by county, and the figures discussed in this article are based on data from a specific point in time. This is not investment or legal advice, and it is recommended to consult directly with a loan officer before proceeding with refinancing or purchasing.