Which refinancing option is best for you?
In California today the mortgage and home loan industry in particular do not have as many refinance loan programs as there are borrowers, but it seems like it sometimes! We will work with you to qualify you for the best refinance program to fit your needs and explain the options you have in complete detail so you understand what you are doing and what you will potential save with each program. But there are some general considerations you can have in mind in advance before jumping into the wrong home loan refinance program in California.
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There are five major reasons to consider refinancing an existing mortgage in California:
* Decrease monthly paymentsfrom a higher fixed rate to a lower fixed rate.
Example: If the rate is 7.5% now and a homeowner switches to a 6.5% rate, he or she will save 1% on the mortgage less the costs of refinancing. On a $200,000 mortgage, for example, the savings will be over $50,000 over 30 years by reducing the interest rate by just that one percentage point.
* Improve monthly cash flow with lower payments. Cash flow may be tight after moving into a new home. Switching to an adjustable rate program where the rate is fixed for the next three to ten years could provide breathing room needed. Similarly, for those who are in a 15 or 20 year term loan, switching to a 30 year term can also increase monthly cash flow.
* Switch to a fixed rate program to eliminate payment changes of adjustable rate mortgages (ARMs). Homeowners with one year ARMs will see their rates rise as rates move up. Using programs that hold rates steady for three, five or seven years, you can refinance into a low fixed rate.
* Withdraw funds from the equity in a home.If cash is needed for home improvements, college education or to consolidate debts, the borrower may be able to refinance 75% to 80% of the current value of the home if it has been owned for one year or more.
* Shorter loan terms. Probably the best incentive to refinance is found by refinancing into a shorter term loan while keeping the loan payment stable. A borrower can save tens of thousands in interest by reducing the term of the loan.
California Refinancing Costs lowest ever
The costs of refinancing have decreased greatly in the past several years. Borrowers can save thousands of dollars up front & closing costs can usually be included in the new mortgage loan amount so that no closing costs or an extremely low amount is required to execute a refinance. The mortgage refinancing cost is at the lowest it has ever been! Take advantage of a great opportunity & refinance if you can to a great low rate.
Paying Points for a lower interest rate is an excellent idea if you are staying in the property more than 4 years.
Deciding whether to refinance usually involves totaling the costs of refinancing and subtracting those expenses from the total savings expected. It is also important to determine how many months it will take to pay back the costs of refinancing from the savings that will accrue.
The savings that can be obtained from refinancing depend directly on the answers to the above questions. It is best to answer these questions with the help of a qualified mortgage professional.
Why Are You Refinancing?
Are you refinancing primarily to lower your rate and monthly payments? Then your best option might be a low fixed-rate loan. Maybe you have a fixed-rate mortgage now with a higher rate, or maybe you have an ARM — adjustable rate mortgage — where the interest rate varies. Even if it’s low now, unlike your ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This is especially a good idea if you don’t think you’ll be moving within the next five years or so. On the other hand, if you do see yourself moving within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.
Are you refinancing primarily to cash out some home equity? Maybe you want to pay for home improvements, pay your child’s college tuition bill, take your dream vacation, whatever. Then you’ll want to qualify for a loan for more than the balance remaining on your current mortgage. If you’ve had your current mortgage for a number of years and/or have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment.
You want to cash out some equity to consolidate other debt? Good idea! If you have the equity in your home to make it work, paying off other debt with higher interest rates than the interest rate on your mortgage — for example, credit cards, home equity loans, car loans, some student loans — means you can save possibly hundreds of dollars a month.
Do you want to build up home equity more quickly, and pay off your mortgage sooner? Consider refinancing with a shorter-term loan, such as a 15-year mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment — you may even be able to save! For example, let’s say years ago you took out a $150,000 30-year mortgage at eight percent. Your payment is about $1,100, exclusive of taxes, insurance and so on. If your balance today is down to $130,000, you might take out a 15-year mortgage at six percent and have an almost identical monthly payment. This is a great option for people whose main goal is not to save money on their monthly payment but rather want to build up equity and pay off their home more quickly.
Whether you’re looking to lower your monthly mortgage payment, switch to a fixed rate mortgage, or even get cash out to finance a major expense, we have the mortgage refinance information & programs you need. If you are experiencing payment difficulties, let’s work together to help keep your home & lower your mortgage interest rate & payment today.
Whatever your financial situation or mortgage situation maybe we can assist you with those situations in the best and fastest way possible, we will help you make the right decisions to achieve your financial or mortgage goals today. It would be our pleasure to serve you and to help you on your way to financial freedom through one of our mortgage rescue options or home loan options today.
We have teamed up with many different lenders to assist our California refinance clients in the best way possible with the most options available around. We will scour all of your refinance options with our dozens of lender options and come up with your best refinance program available to you today.
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