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Mortgage Refinancing 2017-01-21T14:48:40-08:00

Mortgage Refinancing


mortgage refinancing los angeles home loansMortgage refinancing is the process of obtaining a new mortgage to pay off an existing loan. The primary reason homeowners are interested in refinancing is to get a lower interest rate than their current mortgage. But there are also other advantages for homeowners in certain situations.


Obtaining mortgage refinancing is similar in many ways to applying for a conventional mortgage. Lenders set their own credit history and debt-to-income requirements. But most homeowners who have had a mortgage for at least 12 months and have made on-time mortgage and other debt payments can qualify.


The main benefit of refinancing is reducing the monthly mortgage payment by taking advantage of a lower interest rate. Other benefits include the opportunity to switch from an adjustable rate mortgage (ARM) to a fixed interest rate mortgage, eliminating a balloon payment, or converting accumulated equity into cash (sometimes called a cash-out refinance). Converting equity to cash may make sense for homeowners who are interested in paying off higher-interest debt they’ve accumulated, need to do major home improvements or upgrades, or want cash to pay for a wedding, once-in-a-lifetime vacation, or something else on their “bucket list.”

Mortgage rates are currently at or near historic lows, so many homeowners can benefit from an interest rate reduction. Even a fraction of a point and $50 to $100 per month of savings can make a huge difference in the long term. Many homeowners who refinance keep making the same monthly payment, cutting years off the time it takes to pay off their mortgage and saving tens of thousands in interest.


Although obtaining a lower interest rate is appealing at first glance, the costs and fees involved can be significant and must be fully understood in order to accurately evaluate whether refinancing makes sense.