Here is a look at when it is advantageous to pursue these financial steps.
Mortgage refinancing is a valuable tool for California homeowners who want to save on their monthly mortgage payments. This is particularly true for those who took out mortgages in California when rates were higher.
Homeowners can save $35 to $125 per month on their mortgages, for example, freeing up cash for other expenses or for savings.
In order for a refinancing to make sense, a homeowner should find an interest rate that is at least one-half a percentage point lower. Other factors to consider are the fees for refinancing, such as appraisal fees, attorney’s fees and title fees. Some mortgage lenders waive fees, so it pays for homeowners to compare.
Home equity loans also have become a popular financing tool for California homeowners. A home equity loan is a second mortgage on a home, making it a good financing option with a low interest rate.
Home equity loans can be used for a variety of purposes, from college expenses to home repair and major remodeling. A home equity loan makes sense when a homeowner has a favorable interest rate on their first mortgage and does not want to lose that through a refinancing.
The interest homeowner’s pay on home equity loans often is tax deductible, making it more attractive. (See a financial advisor for details).
Refinancing your California home loan
By Wendy Croix
The California market is so hot that benefiting from refinancing depends on how much equity the owner has in the home.
Refinancing is a great idea for owners who are three or four years into their mortgages, and whose credit has significantly improved since their home purchase. Refinancing is also a good idea for older owners who want to tap their equity for home renovations or lifestyle enhancement.
California Property: What's it Worth?
Given the heat of the California market, it's tempting to suggest that a California property is worth whatever the owner wants for it. But overpriced homes do stagnate, even in this real estate climate, so it's a good idea for any owner to check his or her home equity before selling or refinancing.
The National Association of Realtors puts California owners in touch with a wealth of local real estate resources. Just go to Realtor.com, scroll down to "About the National Association of Realtors," click on "State & Local Associations" and "CA" and check for realtors or home sales information in your area.
Local California Refinance Markets
Many mortgage companies in the state deal only with California customers, so they've got the California refinance options down cold. Because the market's so volatile, refinancing can be both tempting and tricky.
Because real estate prices are sky high, the rule of thumb about knocking 2% off your interest rate ceases to be a good guideline. Homeowners need to shop around; the California loan refinance market rates are so competitive that choosy owners stand to gain big dollars.
