California Mortgage Refinance Loans
A refinance mortgage loan is essentially when a borrower replaces their existing loan with one that has a better interest rate. California refinance loans can be used to pay off either a 1st or 2nd mortgage. On average, Americans refinance their mortgage loans every 2 to 3 years, obviously this number is highly dependent on interest rates. In the mortgage environment of the past 5 years (this article was written in late 2006), refinancing your California loan often happened more frequently as interest rates hit all time lows and remain low by historical standards. California refinance lenders are almost always a bank; although they may occasionally be the actual seller of the property or sometimes through a private lender.
When Should You Refinance Your California Mortgage Loan
Refinancing California mortgage loans is a great option if the following conditions exist.
1) The current interest rates that you qualify for are less than the interest rate you are currently paying on your loan. In order to find this out, you will need to speak with a mortgage broker, loan officer or use a basic refinance calculator yourself. The first two options are preferable is you are really serious about a California refinance loan as a broker or loan officer will be able to quote loan rates from specific programs and typically will be able to better ascertain what you qualify for. However, if you simply want to have a basic idea of interest rates that you qualify for you can probably do it yourself.
2) If your original loan is an option arm (3, 5 or 7 year ARMs are most common) and is set to expire in the next several years, you may want to consider refinancing your current loan. This is especially true when the interest rates are trending upward. The mortgage industry is cyclical in nature and we are sure to see a rise in interest rates from the historic lows of the last five years.
3) If you originally took out a first and a second mortgage loan on your home and have gained equity in your home, refinancing may be a great way to get rid of your second loan and consolidate the entire loan into the first. A second is almost always at a higher interest rate than a first mortgage on your home and, if it is a equity line of credit (as opposed to a fixed second), it may be rising steadily if the fed is raising the rates. In order to refinance and get rid of the second, you will probably need to have at least 20% in your home.
How Does A Refinance Loan Work?
Once you decide to refinance your existing loan, you need to find a program that suits your needs. A mortgage lender can shop your loan to various financial institutions to find the best rate for you. It is advisable to speak with more than more one broker to see how rates and terms compare. Some people feel more comfortable using the bank that they have an existing relationship with; while this is understandable, it is certainly worth seeing what programs are out there that may give you a better first and/or second for your refinance loan. In all likelihood, your California refinance loan will be a jumbo loan, defined as any loan above 650k.
Once you qualify for your loan and find out the rates and terms, your broker or loan officer will take you through the additional steps to refinancing your California mortgage loan.
Apply Online for a California Refinance Loan
You can also apply online to find a good rate on a California refinance loan. Click on our link if you would like to apply to multiple California lenders with one simple loan application. If you qualify, these California mortgage lenders should provide you with the best loan rate quotes available. These quotes are free and there is no obligation.
