Mortgage Refinance

• Four Possible Reasons To Refinance in the Bay Area

  31 March 2010 / Mortgage Refinance, Refinance Process / 0 Comment

  A mortgage is generally the largest debt most homeowners have to manage in the Bay Area.  It's a good idea to give your personal real estate finance portfolio a check-up at least once a year.

  Since there are many reasons a homeowner may choose to refinance, we'll take a look at the four most common.

  1.  Mortgage Rates Drop:

  Typically, the most common reason that Bay Area homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost that a borrower will pay. The lower the interest rate, the less the overall cost will be. Interest is calculated on a daily basis and usually paid back to the lender on a monthly basis.

  2.  Lower Payments:

  Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans or removing mortgage insurance.

  3.  New Mortgage Program:

  Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.

  4.  Debt Consolidation:

  If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly mortgage payment can significantly reduce the short-term deficits in a budget.  However, it's important to keep in mind the total cost of that debt by adding it into a 30 year mortgage payment.

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  Frequently Asked Refinance Questions:

  Q:  Do I have to refinance with my current mortgage company?

  No, you may choose any company to refinance your Bay Area mortgage since the new loan will replace the existing mortgage.

  Q:  Is it easier to refinance with my current mortgage company?

  It is possible your current mortgage company may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you're getting the best deal.

  Q:  Will I automatically qualify if I've never made any late payments?

  No, you will have to qualify for your new Bay Area refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance.

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