Mortgage Refinance | California Current

As mortgage rates reach all time lows here in California, many homeowners are considering a refinance of their existing home loans. While dropping mortgage rates may be music to the ears, there are a few things to consider before refinancing.

1. How Long To Recoup The Costs of Refinancing
Closing costs and fees are a part of any refinance transaction, so it’s important you factor these costs into your savings strategy. In most cases, your mortgage broker or lender should detail your estimated monthly savings as well as the estimated closing costs and fees. A simple calculation will let you know how many months, or years, it will take to recoup the costs of refinancing. Think about your short term and long term plans for your home, and determine if the costs of refinancing makes sense. Ideally, your refinance should pay for itself within a few years, and even less if you are planning to sell or move.

2. Do You Have Enough Time To Refinance?
Refinancing could just be the best Christmas present you give yourself this year, but keep in mind the refinancing process could put a damper on your holiday season. In general, for single family owner occupied homes, the refinancing process lasts anywhere from three to six weeks. If you foresee any extenuating circumstances such as poor credit, insufficient documented income, or sliding home equity, don’t be surprised if the process takes even longer. The credit market in California is still quite fragile, and it’s not uncommon for many homeowners these days to face trouble when refinancing. But, if these mortgage rates are just too good for you to pass up, just be sure to set enough time during this holiday season.

3. Evaluate Your Home’s Equity And Then Consider Your Options
In California, the most troubling obstacle for homeowners has been the widespread freefall of home values. During the refinance process, lenders require an appraisal of your home and then evaluate your home’s loan to value ratio. Before considering all your mortgage options, make sure your home has enough value to qualify for a refinance. Although select lenders may make special exceptions, most will like to see at least twenty percent equity in your home. If refinancing to a cheaper mortgage is your top priority, pay special attention as a lower risked home will qualify for better mortgage rates.

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Mortgage Interest Rates Drop To Record Levels
Interest rates on 30 year fixed home loans finally sunk below the five percent barrier; with some lenders offering rates as competitive near 4.5 percent. Even at such levels, analysts and brokers still expect slight improvements in the near future. As the Fed aims to restore confidence in mortgage backed securities, homeowners around the nation have been seeing record declines as 30 year fixed mortgages were close to 6 percent only a few months ago.

Rates Draw In Surge of Homeowners Looking to Refinance
As homeowners continue to hear of the recent decline in mortgage rates, a sector that has taken the backseat during this housing crisis has begun to emerge. While purchase activity and short sales have been prevalent, homeowners looking to refinance have not had much incentive given the stricter loan requirements. But as rates improve considerably, homeowners around the nation and in California have been lighting up the phones of mortgage brokers and lenders. As rates continue to improve, many homeowners have been seeing this as a great opportunity for monthly savings.

Find More Tips About Refinancing Your Mortgage in This Market

Troubled Homeowners in California Still Struggling
Recent findings have shown that troubled homeowners in California who have managed to avoid defaulting still remain at risk. Although laws were passed in California to properly notify those in default, and programs were setup to modify troubled home loans, the findings show that many homeowners only stall the default process. While they manage to avoid foreclosure for a short period, many of these homeowners end up in the same position down the road.

Now, for home values and market confidence, this is certainly disappointing news. But, from a logical standpoint, many of the troubled homeowners have been the folks who took advantage of loose lending and toxic mortgages. If we can agree that lending in the past few years was too lose, it’s almost expected to see a portion of these “homeowners” getting filtered out.

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