Options To Consider For California Refinancing Loans

Are you considering refinancing your first home loan in California?

There are many new  concepts and terms to learn about--something that confuses many new homeowners thinking about a refinance. But refinancing loans aren’t as complicated as you might think once you understand some basic concepts.

New-To-You Types Of Refinancing Loans

Borrowers who applied for a “30-year fixed” chose a home loan option that gives them 30 years to pay off the mortgage, with mortgage payments, interest rates and mortgage insurance (where applicable) costs divided up over those thirty years minus any down payment, pre-paid interest rate points and other considerations. Is a borrower required to refinance into the same type of 30-year mortgage as the first one?

No. When refinancing, you have options that include Adjustable Rate Mortgages or ARM loans for short. This type of refinancing loan isn’t new to California home owners, but as a new-to-you refinancing option, it’s important to know the terms and conditions of an adjustable rate mortgage loan and plan a financial strategy to accommodate it. Many borrowers consider ARM loans with the idea that they will refinance into a fixed rate mortgage later on, avoiding some of the changing interest rates later down the line on the original ARM.

The 15-Year Fixed

Some borrowers have financial goals that include paying off a mortgage loan by a certain date, such as the year they reach retirement age. But not all home buyers in the California housing market make such plans when buying their first home--some decide paying off the loan as early as possible is a good idea only after paying on their original mortgages for a few years. Refinancing into a 15-year fixed rate mortgage may require higher payments than a 30 year mortgage loan, but for those who want to pay off the loan as early as possible, a 15-year fixed rate mortgage can be a sound financial strategy.

30 Year FHA Refinancing Loans

Some choose to refinance from a conventional home loan to a 30-year FHA refinance mortgage. This makes sense for borrowers looking to get into a better interest rate, or refinance from loans featuring penalties for early payoff. Some want to get a cash-out refinancing loan but don’t want another conventional mortgage. The FHA 30-year fixed allows refinancing for up to 100% of the appraised value of the property.

There are many options for California home owners looking to refinance. The best option is the one that most closely matches your financial needs and goals.

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