Showing posts with label Mortgage Payment. Show all posts
Showing posts with label Mortgage Payment. Show all posts

7/17/2025

How Are Interest Rates Impacting Long Beach Buyers?

Downtown Long Beach
The Long Beach housing market in early 2025 has been shaped by high mortgage rates and tight supply.

By June 2025, the median Long Beach home price hit $1,075,000 (up ~7.4% year-over-year).  Sales volumes rose modestly (around 240 homes sold in June, up 11.4% from 2024, but homes took longer to sell, the median was 30 days on market, about 12 days longer than last year.  In other words, prices remain elevated despite rising rates. Nationally, 30-year fixed mortgage rates have hovered near 6.9% in mid-2025 after a low of 6.5% in March (investopedia.com). This high-rate environment is a headwind for affordability even as demand persists.

Rising Rates & Monthly Costs

Higher interest rates translate into much larger mortgage payments and carrying costs. For example, at 6.9% interest, a 30-year loan of about $732,000 (20% down on a $915,000 home) has principal-and-interest around $4,800/month. When you add ongoing expenses, the total monthly housing cost exceeds $6,000. Typical breakdowns for a median Long Beach home are approximately:

  • Principal & Interest: = $4,800/month (30-year at 6.9%).

  • Property Taxes: $950/month. Long Beach’s effective tax rate is 1.25% (plus other indebtedness measures) so a $915,000 home has about $11,400/year in taxes (≈$950/mo).

  • Homeowners Insurance: $90–$100/month (average California premium ~$1,148/year (moneygeek.com).

  • Utilities: ≈$364/month. Long Beach residents pay roughly $364 per month for basic electricity, water, gas, internet and trash (viprealtyca.com.)

Each of these costs strains a buyer’s budget. 

 Key components: 

    30-year mortgage at 6.9% investopedia.com, | taxes at 1.25% of value | home insurance at $1.15K/year moneygeek.com, and | utilities at $364/mo viprealtyca.com.

First-Time Buyers Face an Uphill Climb

First-time buyers have been hit hardest by the rate surge. National data show their market share fell to just 24% in 2023–24 (from 32% a year earlier) nar.realtor.These buyers typically have lower incomes (median ~$97,000 and smaller down-payments (~9% of price nar.realtor). In Long Beach’s expensive market, high rates and prices squeeze them further. National Association of REALTORS notes that “first-time buyers face high home prices, high mortgage interest rates and limited inventory” making it difficult to enter the market. For example, a first-time buyer using an FHA loan (3.5% down) on a $915,000 home would still borrow $882,000, resulting in principal and interest well above $5,400/month before taxes/insurance.

Unfortunately, the city’s First-Time Homebuyer Assistance Program has closed for now, but see City of Long Beach buyer programs. Programs like these can help cover down payments or closing costs. More information about down payment programs are available at this link for down payment help. Still, buyers must plan for big monthly payments and save aggressively. In practice, many first-timers are waiting longer (the average age is 38 now) and relying on gifts or loans from family (in 2024, 25% used family assistance) nar.realtor.

Repeat Buyers and Cash-Purchases

Current homeowners (repeat buyers) are generally better positioned. Many have built-up equity or savings. In 2024, the median down payment was 18% of home price (vs 9% for first-timers) and a record 26% of buyers paid all cash nar.realtor. This capital advantage lets sellers “trade up” or buy with big down-payments instead of high-rate loans. In practical terms, a Long Beach homeowner selling an older home can put significant cash down on the next purchase, or even skip a mortgage entirely. That means repeat buyers feel the rate pinch far less than first-timers. Nonetheless, rates above 6% still encourage many repeat buyers to negotiate harder – for example, by asking sellers to buy down the rate or reduce price.

Looking Back and What’s Next

Compared to earlier years, Long Beach’s spring 2025 market is relatively stabilized by high rates. In 2022–23, record-low rates (3%–4%) and surging demand sent prices skyrocketing. By mid-2023, rates had already climbed above 6.5%, and sales activity cooled. The 2024–25 data show prices still above pandemic-era levels but slowing: e.g., a 7–8% year over year increase in mid-2025 versus double-digit leaps in 2021–22. National forecasts expect rates to remain “mid-6%” through 2025 realtor.com, so affordability will not improve dramatically soon. As one Realtor.com report puts it, home buying in 2025 should be “friendlier [to buyers] than in past years” due to higher inventory and slower pace realtor.com, but it will still be “costly due to stubbornly high mortgage rates and home prices.” Buyers should expect a more balanced market than the frenzied seller market of 2021–22.

Practical Takeaways for Buyers

  • Budget for High Rates. Current 30-year fixed rates are near 6.9% investopedia.com. Lock a rate early if possible.

  • Include All Costs. In your monthly budget, add property tax (1.25% of home value, and insurance ($1,150/yr on top of the mortgage. Don’t forget utilities (roughly $364/mo in Long Beach).

  • Plan Your Down Payment. First-timers often put down 9%, while typical buyers put down 18% nar.realtor. Larger down-payments (or any cash) reduce monthly payments. 

  • Use Assistance Programs. Check local help for first-time buyers. 

  • Shop Around. Compare lenders and loan options (e.g. jumbo vs conventional) to get the best rate.

Finally, remember that an experienced local REALTOR can be your greatest ally. A knowledgeable Long Beach agent knows how to navigate bidding wars, negotiate concessions (like rate buy downs), and connect you with loan officers offering competitive rates. In a market burdened by high rates, having the right team – lender, agent and possibly financial advisor – is key to finding the most affordable deal.

Thanks for making your way through this lengthy post. For more explanation, please contact me!

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

5/07/2025

Have You Tried Calculating Your PITI Recently?

Sometimes it's important to review basic aspects of financing a new purchase, or maybe you're a homeowner looking at refinancing.

Understanding your monthly mortgage payment is crucial when buying and owning a home. A key concept in this process is PITI, an acronym that stands for Principal, Interest, Taxes, and Insurance. These four components make up your total monthly mortgage payment and are essential for budgeting and loan qualification.


🧮 What Does PITI Stand For?

  1. Principal: The amount you borrow from the lender to purchase your home. Over time, your payments reduce this balance, building equity in your property.

  2. Interest: The cost of borrowing money, expressed as a percentage rate. This is the lender's charge for the loan.

  3. Taxes: Property taxes levied by local governments, typically based on your home's assessed value. These funds support community services like schools and infrastructure.

  4. Insurance: Homeowners insurance protects against damages from events like fires or storms. If your down payment is less than 20%, you might also pay Private Mortgage Insurance (PMI)


🏡 How to Calculate Your Monthly Mortgage Payment (PITI)

To estimate your monthly mortgage payment, follow these steps:

  1. Determine Principal and Interest:

    • Use a mortgage calculator or the formula:

      Where:

      • = Monthly payment

      • = Loan principal

      • i = Monthly interest rate (annual rate divided by 12)

      • n = Total number of payments (loan term in months)

  2. Estimate Property Taxes:

    • Property taxes vary by location but often range from 1% to 2% of your home's value annually. Divide the annual tax by 12 for the monthly amount. In California when purchasing a new property, the property tax rate is most commonly calculated at 1.25%.

  3. Estimate Homeowners Insurance:

    • Annual premiums typically range from 0.15% to 0.5% of the home's value. Divide the annual premium by 12 for the monthly amount.

  4. Add PMI (if applicable):

    • If your down payment is less than 20%, estimate PMI at about 0.5% to 1% of the loan amount annually. Divide by 12 for the monthly cost.

  5. Calculate Total PITI:

    • Add together the monthly amounts for principal, interest, taxes, and insurance to get your total monthly mortgage payment. (See below about HOA dues).


📊 Example Calculation

Suppose you're purchasing a $350,000 home with a 5% down payment and a 30-year fixed mortgage at a 7% interest rate:

  • Loan Amount (Principal): $332,500

  • Monthly Principal & Interest: Approximately $2,212

  • Monthly Property Taxes: Approximately $583

  • Monthly Homeowners Insurance: Approximately $52

  • Monthly PMI: Approximately $138​

Total Monthly Payment (PITI): Approximately $2,975​

If HOA Dues for a Condo: Add $350 to $400, Total Monthly Payment (PITI + HOA): approx $3,375.

Try this online calculator from the Fannie Mae site.


💡 Why PITI Matters

  • Budgeting: Understanding PITI helps you determine how much home you can afford and ensures you're prepared for all associated costs.

  • Loan Qualification: Lenders assess your PITI in relation to your income to determine loan eligibility. A common guideline is the 28% rule, where your PITI should not exceed 28% of your gross monthly income, however, consult with a loan officer because loan programs vary.

  • Financial Planning: Being aware of all components of your mortgage payment aids in long-term financial planning and prevents unexpected expenses.​


🔍 Additional Considerations

Beyond PITI, be mindful of other potential costs:​

  • Homeowners Association (HOA) Fees: Applicable if your property is in a community with shared amenities.

  • Maintenance and Repairs: Regular upkeep and unexpected repairs can add to your monthly expenses.

  • Utilities and Services: Electricity, water, trash collection, and other services are separate from your mortgage payment.​


For more explanation of calculating your monthly mortgage payment, you might find this video helpful: 



Understanding and calculating your PITI is essential for making informed decisions during the homebuying process. By accurately estimating these costs, you can ensure that your future home fits comfortably within your budget.​

Sources:  Chase Bank, Bankrate, Lending Tree, Newcastle Home Loans


Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

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