Refinancing California home loans has become more difficult than ever. Due to the overwhelming fall in this state's housing values, many lenders are unwilling or unable to offer refinanced loans at the values of many mortgages. For homeowners, the process of refinancing can be difficult.
Factors Affecting Refinancing California Home Loans
Prior to 2007, California home loans were one of the best investments in real estate. During this time, housing values skyrocketed as demand increased. The real estate market has fallen throughout the United States, but it has been especially harsh in many areas of California. A home bought for $1 million in 2005 could have sold for $3 million a year later with upgrades. That same property may sell for $500,000 today, CreditLoan.com explains.
This has left many homeowners underwater with current loans. Being underwater means the homeowner owes more on the loan than the home is worth. Because of this, it is difficult -if not impossible- for some homeowners to refinance mortgages. Lenders will only refinance mortgages for the current appraised value of the home and many lenders now require mortgage holders to have at least 20 percent equity in their homes.
What You Can Do
As a homeowner hoping to refinance a California home loan, there are options. The individual circumstances of your home make the biggest impact on your ability to refinance. Some help may be available to homeowners who can meet specific criteria.
Qualify for Refinancing
For those property owners who do not have an underwater mortgage, numerous financial lenders will help you to refinance your loan. If you have good credit and steady income, lenders are likely to approve refinancing of a home loan. Consider the following small assortment of lenders who refinance properties in California.
- Wells Fargo offers refinancing opportunities for well qualified consumers. You can obtain preapproval and additional information on the Wells Fargo website.
- Quicken Loans also offers refinancing for California homeowners. The company offers competitive interest rates for FHA, VA, and conventional refinance. You can use the Quicken Loans website to get a fast quote or to compare options.
These are just a few of the refinance lenders available in California. Discuss your options with local lenders, credit unions, and other national companies before investing.
Making Home Affordable Program
One opportunity to consider is the federal government's Making Home Affordable Program. This program's goal is to help mortgage lenders work with mortgage holders who wish to remain in their homes but need a solution to their current loan terms. Consumers must meet specific standards to qualify for consideration of the program. To determine if you qualify, visit the Making Home Affordable Program website.
For many homeowners, these options may not be enough to qualify for refinancing. You may not qualify under the government program and, even if you do, the process may not be successful for you. Consider the following options:
- Continue to repay your mortgage at the current terms. Pay down the balance until the property's value matches what you owe on the mortgage. Then, consider refinancing.
- Talk to your lender and determine if any mortgage modifications are available. Some lenders will work with you to modify the loan to make payments easier for you. Discuss the options your lender may have.
- Determine the benefit of obtaining third party loans. Though these loans are more expensive, hard money loans or loans from other private lenders may help you to pay down your mortgage balance, allowing you to better qualify for a mortgage refinance.
For those who are in need of refinancing California home loans, the first step is to take action. Work with local city groups helping homeowners to avoid foreclosure. Determine what all of your options are before making the decision to move forward. In some situations, you may find the value of your home rising as the California housing market improves. This will make it easier to qualify for refinancing as well.