Mortgage Refinance in California
There are several reasons to refinance in California: extra cash, a shortened mortgage, or lower monthly payments. As a borrower, it is important that you consider whether the amount you will save on lower interest payments will outweigh the cost of refinancing (generally three to six percent of the total amount borrowed).
Fees may include:
- Settlement costs
- Discount points
- Penalty fee for prepaying loan
Another money-saving option for the California borrower is to refinance an Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage. This is an excellent option for individuals who can currently afford to make greater monthly payments than they could at the time of the original loan. This is beneficial because the borrower can lock in at a lower interest rate and not be susceptible to an ARM increasing to a higher interest rate in the future. With a Cash Out Refinance, homeowners can take advantage of their home's equity. In this situation, the refinance is greater than the original amount of the loan, and the borrower receives cash back that can be used for home improvements or other large expenses. additionally, borrowers can refinance to shorten the term of their mortgage.
California Loan Options: Many borrowers choose to refinance when interest rates are significantly lower than they were at the time of the original mortgage. Lower payments can result in extra money for the homeowner every month. To learn more about refinancing in the Golden State, visit the California Department of Housing.