December 11th, 2014 7:16 PM by Nathan Rufty
Refinancing your current mortgage(s) can provide you with the opportunity to reduce your interest rate, lower your monthly mortgage payment and/or adjust your loan term to short time you pay on a home loan. For those homeowners who have owned their home for more than a few years, refinancing and pulling equity out of the property to pay off credit card debt, you may have extended your spending on items for the home and now it is time to pay those debts off. Also, pulling equity out of the home for home improvements projects should increase the value when spent in the proper area of the home that will have a huge return on value. However, with property values and interest rates adjusting frequently, you may wonder if now is the best time to refinance your mortgage. You will need to explore this option before the values decrease or interest rates increase, at least investigate your options before an opportunity passes you by. Using the Equity in you Property for a Refinance: One factor to consider when looking to refinance now or waiting relates to the equity in your property. If you are looking to access cash now for home improvements or other purposes, refinancing now may be the ideal situation, considering the rates for home loan are much lower than a line of credit, signature loans or credit card rates. Even if you do not need access to your equity for several months, you can lock in today's interest rates and invest the money in other avenues, such as CDs, bonds retirement plans, have the available cash so when you need it, it is quick to access. Anticipating Market Changes in Values and Interest Rates: It is about supply and demand. You may be aware of the interest rates for home mortgages have been slowly rising this past couple of months in California, while they remain close to historic lows, projections are that will continue to rise. No one can predict with certainty how mortgage interest rates will adjust in the next few months or even for years and locking in today's rates may be a benefit to you financially. Keep in mind that if rates decline significantly in the near future, you can always look into refinancing again to take advantage of the lower rates, but if they continue to rise then you refinance at the right time. Reducing Your Principal Loan Amount: If you have a higher interest rate on your current home mortgage, your principal balance may be reduced at a slower rate than if you refinance to a lower interest rate. In addition, if you refinance from a 30 year term to a shorter term like a 20 or 15 year fix term, your principal balance will also be reduced much more quickly. In many situations, refinancing your home mortgage today may establish a more efficient repayment schedule that allows you to accrue equity at a faster rate. Paying down the principle balance will result it faster equity growth in your property as long as you budget for a short term note. Each homeowner has their own unique factors to consider when refinancing which are based on the property value, current credit rating, existing loan terms and other factors. While many will benefit by refinancing an existing mortgage, you can speak with a mortgage professional for specific advice and recommendations regarding your financial situation. Call me at 909-503-5600 today to inquire about the options and to begin working on your refinance loan application.Does not hurt to explore your options before those options are gone. I welcome the opportunity to review your plans with a refinance on your California property.