Refinancing a California Mortgage

From LoveToKnow Mortgage

The real estate market is so hot right now that refinancing a California mortgage could significantly benefit homeowners.

About Refinancing a California Mortgage

The California housing market has seen more ups than downs. Depending on where you live in the state, your home may be worth almost whatever you want to sell it for. This can make refinancing very tempting.

However, there has been talk of a housing bubble and often times in cases such as these, overpriced homes can see significant dips in value. Before refinancing, you will want to have your home appraised to determine exactly how much equity you have built up. The more equity you have, the safer it is (financially) to refinance. You will also want to follow other basic rules of refinancing:

  • Refinancing works best when you can lower your interest rate by at least a point or two.
  • If you do not plan to stay in the home for very long, refinancing may not be in your best interests.
  • Shop around to find the lowest rates and lending fees. The cost of refinancing a California mortgage can vary dramatically depending on where you go to get the loan.
  • Choose the right lender. If your lender is not reputable, your refinance could be a costly mistake.
  • When refinancing, consider looking beyond your current lender. You may be able to get a better deal somewhere else.

Cash-Out Refinancing

If you have owned your California home for a significant amount of time, chances are you have a wealth of equity built up. The more equity, you have, the easier it will be for you to refinance—especially if you want to take advantage of cash-out refinancing.

San Francisco has some of the most expensive real estate in the nation.

Cash-out refinancing will allow you to receive cash back at closing when you refinance your home. This can be very beneficial when refinancing a California mortgage, because many home values have almost doubled in the last decade. You could use the cash money for home improvements, college tuition, or debt consolidation.

Here is an example of how cash-out refinancing works:

Amount owed on home: $50,000
Value of home: $250,000
Amount of equity in the home: $250,000 - $50,000 = $200,000
Amount of cash that can be received at closing: $200,000

The above is just an example and applies to someone who wishes to borrow every penny of equity that they have built up in their home. The amount of money that you can borrow will depend not only on how much you owe and the value of your home, but also on the guidelines set by your lender. Some lenders will only allow you to borrow up to 80% of your home's value, while other lenders are willing to allow you to borrow up to 125% of the value. Knowing what you want before you apply for a loan will help you to find a lender who can best serve your needs.

Refinancing a California Mortgage with a Local Lender

Because California is such a hot spot for loan activity, there are many lenders in the state and online who are dedicated solely to working with California residents. If you are interested in refinancing a California mortgage, you may want to consider one of these lenders.

To find a lender in your area, visit Realtor.com. Fill out the short form, and you will be given a list of lenders who are close to home.


 


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