Call us now - (888) 537-7007

How Refinancing Works:  

Refinancing pays off existing mortgage loans, may also pay some or all closing costs,  to the owner of the property. The "Rule Of Thumb" used to be that if you could lower your interest rate by 1/2% or more then you should refinance;

THAT RULE IS NO LONGER CORRECT! It may make sense for you to refinance even if you can lower your rate by only .25%.

Then again, you might be better off not refinancing if you plan to move in a year or two. It does make sense to refinance if you can recover your costs and make a fair return on your investment before you plan to sell your home or pay off your mortgage loan. We can help you calculate where your break-even point is on refinancing.

There are many reasons to refinance your mortgage loan, but they all fall into three categories; you may want to use just one or all three:

  1. Save money with a lower interest rate.

  2. Use your equity to borrow more money.

  3. Restructure your existing mortgage loan.  

Saving Money With A Lower Interest Rate Mortgage Loan.

Refinancing to save money is like making an investment, where the interest you save is the return on your investment. You should ask yourself these questions before investing time and money in refinancing:

  1. How much will it cost me to refinance my California mortgage loan?

  2. How much money will I save?

  3. Are the savings large enough to justify the costs?

Remember These Tips When Refinancing To Save Money:

  • Lowering your interest rate by as little as .5% can save you thousands of dollars ("no cost" refinances may make an immediate impact on your savings).

  • You don't start saving money until after you have recovered the costs of refinancing.

  • Look for a mortgage loan with few or no points, even if it has a slightly higher rate.  

  • The equity that you have in your home, is the value of your home minus the outstanding mortgage loan balance. You can borrow more money using your equity as collateral in a couple of ways:

  • Replace your existing California mortgage loan with a larger amount mortgage; or

  • Leave your first mortgage loan in place and get a second mortgage loan.

There is no rule to tell you which of the above methods is best for you. The choice you make must be based on what you plan to do with the extra money, how much you'll need, and how quickly you plan to pay it off.

Remember These Tips When Using Your Equity:

  • You can borrow more money by using the equity built up in your home as collateral.

  • Compare the costs of a new first mortgage loan versus a second mortgage loan on large loans. Usually, a second mortgage loan  will be cheaper up-front, even though it has a higher rate.

  • On smaller loans, compare second mortgage loans, unsecured personal loans, and a line-of-credit mortgage loan.

Restructuring Your Existing Caifornia Mortgage Loan

Restructuring your existing mortgage loan financing is the final reason to refinance. Maybe you have a second mortgage loan coming due, or your current mortgage loan is an ARM (Adjustable-Rate Mortgage) and you want to replace it with a fixed-rate mortgage loan.

There are ARM mortgage loans with a "Convertible Feature" that allows you to convert your ARM mortgage loan to a fixed-rate mortgage loan after a period of time (and sometimes with a fee attached to it). If your existing mortgage loan has this feature, then we should review it with you to see if this is perhaps your best option.

Remember These Tips When Restructuring Your Existing Mortgage Loan:

  • When replacing a maturing second mortgage loan, be sure to compare the costs of a new second mortgage loan with the costs of replacing both your old first and second mortgage loans with a new first mortgage loan.

  • Replacing an ARM with a fixed-rate mortgage loan will cost you money up-front, and may raise your monthly payments. But knowing your payment is fixed over the life of the loan could be well worth the costs.