Image courtesy of Flickr, 401(K) 2012
Los Angeles County homeowners have paid an estimated $5.2 Billion in origination fees to attain a purchase and refinance loan on their homes from 2011 - 2014. This article will review how many mortgages were originated, the average loan amount and what borrowers paid in fees.
The housing market in the U.S. is a large part of the economy, so the ups and downs of the market have a tremendous effect on the well-being of the overall economy. Financing the activities of the housing market and refinancing existing loans for housing is an important and very lucrative business for the companies and lenders involved in these transactions.
In this article, we will specifically discuss the purchase and refinance of mortgage loans in Los Angeles County. We start this series of articles with L.A. County. With nearly 10 million residents, it is the most populated county in the United States, and is more populated than 43 states in the U.S.
You will learn how many purchase and refinance loans were originated from 2011 - 2014, otherwise known as the recovery years of the housing market. You will also learn what the average loan amounts were, what the total loan volume was and how much in origination fees were paid from 2011 - 2014.
We took a close and exhaustive look at mortgage loan origination data derived from the CFPB website in relation to the Home Mortgage Disclosure Act (HMDA), which is a United States federal law that requires certain financial institutions to provide mortgage data to the public.
The data we reviewed spans the years 2011 - 2014 and includes all residential purchase loans and refinances in Los Angeles County. The data we retrieved includes originated loans for one-to-four family dwellings, manufactured housing and multifamily dwellings.
The HMDA defines a multifamily property as a residential structure that houses five or more families. A structure is classified as a one-to-four family property if it houses fewer than five families, it also includes individual condominiums or cooperative units.
Real estate purchase loan activity has been relatively stable in Los Angeles County, with a total of 236,989 purchase loans from 2011 - 2014 according to HMDA data. The year 2014 had 58,428 purchase loans originated. The chart below will visualize the data for purchase loans for this four year time span.
Although Los Angeles County is not the most expensive county in the state of California, a title San Francisco currently holds, the average purchase loan amount is still relatively high within the state and when compared to other states in the U.S. In 2014, the data suggests that the average purchase loan amount in L.A. County was $529,468. The graph below outlines the average purchase loan amounts for the four year time span.
Whenever we conduct research like this for these types of articles, it never ceases to amaze us how large the sheer volume of mortgage loans changing hands are every year in Los Angeles County. The total mortgage purchase loan volume from years 2011 - 2014 was $107,901,444,000. The table and chart below will show the loan volume for purchase loans in L.A. County for the four year time span.
Los Angeles County mortgage refinance activity in 2014 was approximately half of what it was in 2013. L.A. County saw a total of 606,304 mortgages refinanced from 2011 - 2014 according to HMDA data. The year 2014 had 84,638 refinanced mortgage loans originated. The chart below will visualize the data for refinance activity for this four year time span.
California has a tremendous amount of activity with regards to mortgage refinances. There is no doubt that it is an extremely lucrative part of the mortgage lending business within the state. According to the data, the average refinance loan amount in L.A. County was $447,671 in 2014. The graph below outlines visualizes the average mortgage refinance loan amounts for the four year time span.
Our research into the data reveals that refinance loan activity has been more than double that of purchase loan activity in Los Angeles County when considering the total for all four years. The total mortgage refinance loan volume from years 2011 - 2014 was $238,314,171,000. The table and chart below will show the loan volume for purchase loans in L.A. County for the four year time span.
Based on our research, we have found that the majority of new and existing homeowners use the services of traditional mortgage lenders and mortgage brokers to help them attain a new purchase loan or refinance their existing home loan. The majority of mortgage customers pay within a range of 0.50 - 2.5 percent of the loan amount as the origination fee, depending on each borrowers unique credit qualifications.
For our intents and purposes, we will use the middle of the range to approximate that mortgage loan borrowers in Los Angeles County paid 1.50 percent of their loan amount in origination fees. Using this figure, from the years 2011 - 2014, purchase loan borrowers paid a total of $1,617,021,660 in origination fees and refinance loan borrowers paid a total of $3,592,712,565 for the four year period.
The following graph will visualizes and compares how much in origination fees were paid by borrowers to attain purchase loans and refinance loans from 2011 - 2014.
It's important to keep in mind that the fees we have discussed here are simply for the charges a borrower pays to lender or broker to originate the loan for them. This lender/broker fee typically includes an administrative fee, an application fee, an underwriting fee, document preparation fees and other smaller fees which amount to approximately 1.50 percent of the loan amount, based on our estimations.
Every mortgage loan process also has other fees in addition to origination fees, such as escrow services, title insurance, mortgage insurance, notary fee, appraisal fee, document recording fees and other smaller fees as well. Depending on the size of your loan, the type of property and the particular state and county you are in, these fees can amount to another 1 - 2 percent of the loan amount in addition to the origination fee. You can use this closing cost calculator to get a better idea of what you can expect to pay when looking for a purchase mortgage or a refinance.
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