How To Shop For A California Home Loan Refinance

Refinancing your California home can be as simple as filling out the online application, but being an informed borrower is an important part of making the right choices on your refinancing options.

Knowing how much your property is worth is only one detail in a bigger picture. You may have an idea what to expect from a cash-out or home equity refinancing loan in terms of your home’s value, but there are a few other important details you should consider side-by-side with property values and the expected loan amounts.

Loan Strategy

What kind of home loan do you currently have? A fixed interest rate loan refinance offers different possibilities than variable-to-fixed rate refinancing and other choices. What is the immediate, short term benefit of your refinancing loan, and what are the long term implications?

Does your California mortgage loan payment go down after refinancing? Does it stay the same due to including allowable fees or other expenses into the loan? Are you happy with a shorter or longer loan term? These are all important questions to consider when formulating a refinancing loan strategy.

Fees and Expenses

If you plan to include allowed fees and expenses into your refinancing loan, what are those costs? FHA refinancing loan fees and VA loan fees, for example, aren’t identical. Borrowers refinancing in or out of either of these two programs should not assume the same types of loan fees will apply from one to the other, or match at all for conventional loans. VA loan rules can be more detailed when it comes to financing certain costs, while conventional loan requirements depend more on the individual lender. Compare fees and how they must be paid between conventional, FHA, or VA options. Is a no-cost refinancing package right for you? Or is paying certain fees/expenses up front a smarter choice?

Extras

VA loans have an option for refinancing loans which allows up to $6,000 for approved energy-efficient improvements. Conventional mortgages may feature similar programs depending on the lender, and the FHA allows refinancing combined with rehab with its 203 (k) refinance loan. Do you need or want such options? Add the cost for such extras or optional items to your bottom line when doing the math on your refinancing loan homework.

Ask your loan officer about your options in these areas, how they can and will affect your loan amount and monthly payments. Depending on your mid-term and long-term financial goals, it may make sense to do a side-by-side cost comparison of the different types of refinancing loans for your California home to see what’s best for you.

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