California Mortgage Refinance Loans & Florida Refinancing Lending Information

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Mortgage Refinancing – The Basics

It is common knowledge as a homeowner that you should wait until refinance mortgage rates fall two percent below your current rate before pursuing a refinance mortgage loan. However, this rule of thumb is not necessarily set in stone. Even if the going mortgage rates are within two percent of your current interest rate, refinancing may still be a strong option. This is because the reduction in the interest rate, no matter how slight it may be, can still potentially lower your monthly payments. For instance, say you’re a California resident and have a 30-year fixed rate mortgage of $150,000 at a rate of 10%. Your monthly payments, not including various taxes and insurance, would be close to $1,500. However, say you choose to refinance your mortgage loan in California when rates are down to 9%. Your monthly payments on the second mortgage would be down around $1,400, a difference of approximately $100 a month. Over the course of a year, you would have saved over a thousand dollars from a home mortgage refinance.

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 The Decision-Making Process

Regardless of the aforementioned scenario, your decision to refinance your home mortgage loan should depend not only on your personal financial situation, but also on how long you plan on living in your home.

You must also consider the type of loan your currently have. If you have an adjustable rate mortgage, there’s a strong chance that you’ve witnessed a rise in your interest rate, and consequently, your monthly payment. Considering this situation, it might be a wise decision to refinance your current mortgage into a fixed rate mortgage so that your monthly payments are stable.

If your credit status has improved since you obtained your first mortgage, you might look to refinance your current mortgage now so as to achieve a better rate. On a similar note, if your overall financial situation has also improved, you may find yourself able to pay a higher payment each month. In this case, you should consider refinancing your mortgage into a mortgage loan with a shorter tenure. With the higher payments and the shorter term, you can establish equity more quickly and save a considerable amount of money.

On the other hand, if you are struggling to pay a monthly payment on a 15-year fixed rate mortgage loan, you might consider refinancing your current mortgage into a 30-year fixed rate mortgage. Although the monthly payments will be shorter, you should realize that over the life of the loan, you would most likely end up paying more.

Bad Credit Mortgage Refinance

Let’s say you’re a Florida resident and you need some extra cash. If you have built enough equity in your home, you should consider refinancing your mortgage into a second mortgage that has a bigger principal. This will liquidate a portion of your home’s equity into cash. Borrowers with a 520 or below credit score may still qualify for a bad credit mortgage refinancing loan.

It’s important to understand that although refinancing your current mortgage may appear to be the most beneficial option for you and your financial situation, it will cost you money at first. Therefore, it is not wise to refinance your mortgage if you don’t plan on residing in your current home long enough for the second mortgage to pay off.

To see whether you are a good candidate for mortgage refinancing, click on our mortgage refinance calculator.