San Diego Refinancing Mortgages

Written by Stephanie Dula
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Plenty of homeowners in San Diego and elsewhere are recognizing the amazing potential that refinancing has for cutting monthly payments and consolidating debt. While refinancing can result in substantial savings for the borrower, it's not an all-purpose guarantee of cash for homeowners in a pinch. There are several vital questions one must ask before looking into the possibility of refinancing their mortgages.

Refinance and Timing

For example, if a homeowner will be staying in his or her home for only a couple of months or years, it may not make sense to refinance. Even if monthly rates are reduced, it will still take at least a few months to make up for the refinancing fee charged by the lender. It's important to research various options when looking to refinance; some lenders will charge a low rate but impose a substantial up-front fee, and vice versa.

Since mortgage lenders make the bulk of their money from interest charged on the money they loan, they tend to not like early payment of the entire balance. Since refinancing is essentially taking a new loan out to pay off the old one (along with some extra to use for a variety of reasons), it's important to know whether or not there is a prepayment penalty on the original mortgage. If there is, it may make sense to wait a few years to avoid this penalty and keep paying down the balance. By this time, the homeowner will be in an even better position to refinance, having a larger share of equity in the property. Hopefully, the property will have continued to go up in value during this time as well, making for a more favorable loan-to-value ratio.

There are many free loan calculators for use on the Internet, which will help owners decide if it is the best time to refinance. These calculators can be very valuable indeed, for a variety of loan and mortgage decisions. They provide something for everyone, whether it be a first-time home buyer or seasoned real estate investor.


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