MORTGAGE refinance is an option available to US permanent residents to pay back a mortgage loan taken earlier by taking a new loan with the same property serving as collateral.
Refinance is recommended if the earlier loan taken was on a higher interest rate than the rate currently prevailing in the market.
People use the refinance facility to reduce the repayment burden by either opting for a lower interest loan or by increasing the repayment time. This article deals with the online mortgage refinance scene in the state of California.
Finance and refinance is a competitive business in the United States and even more so in California where some of the highest-price properties in the country are located. Given the competitiveness in the market, there are a large number of lenders and brokers competing for business.
It is relatively easy to obtain mortgage refinance because it is a secured loan and the lender can recover the loan in case of default by auctioning the property. Given the relative ease of obtaining mortgage refinance, there is a chance that you, the uninitiated, may end up making a wrong refinance choice.
It is therefore important to first take two important decisions before approaching lenders or brokers.
The decisions to be taken by the borrower are:
- Do you really need refinance? If you have already paid off a substantial portion of your existing mortgage and you are not in any kind of financial crisis, you have to take expert assistance to decide whether it makes sense to opt for refinance even if the current interest rates are lower. Remember that apart from interest rates, there are also interest rate charges to may have to be paid.
- Are you looking for the lowest possible monthly payments, or for the lowest interest rate?
Once you have decided that, yes, you do need mortgage refinance and also whether you want lowest possible payments or lowest rates, you have to seriously sit down with a broker or a lender’s representative.
Brokers are often preferred because they have offers from several lenders and can provide you with choice without any effort on your part. You have to inform your broker whether you want a fixed-rate loan or an adjustable rate loan. An adjustable rate loan is one which starts with a low initial rate and increases after a pre-specified number of years.
Your broker can also help you decide on this after taking into account your specific financial position.
There is actually nothing called ‘online refinance’. Refinance is obtained through brick-and-mortar offices of lenders. However, the term ‘online refinance’ is loosely used to refer to the method of locating and applying for refinance through the Internet.
There are brokers specializing in mortgage and mortgage refinance, and most of them have their own websites (a broker who does not have a website is a rarity and you must treat them with caution).
Websites of mortgage brokers contain useful information about the business which gives you a headstart in your loan application process. Typically, the websites also contain a mortgage refinance rate calculator that enable you to compare different rate options.
The calculators are easy to use: you simply have to enter required details – such as the type of your property, its location and, in some cases, the amount outstanding on your existing mortgage.
The rate that will apply for your refinance is displayed on the screen in seconds or, in some cases, you are promised that a representative will contact you soon (and they usually live up to the promise).
There are many brokers eager to take up your mortgage refinance assignment and it is not feasible to provide an exhaustive list here. The following list is therefore only illustrative and you should be aware that a simple search on the Internet will provide you access to many more brokers.
The six mortgage refinance brokers serving California recommended to this writer by knowledgeable sources are:
Note however that it is most advisable that while you use websites of mortgage refinance brokers, you ensure that they have a street address. Always treat entities with only online presence without a terrestrial office with some suspicion. And remember that consult and get at least three opinions, or offers, from different brokers before settling with one.
Before you apply for mortgage refinance, you should do some self-work with information provided in this article as well as that obtained from browsing the Internet. Then get opinions and offers from at least three brokers before selecting one. Be wary of brokers with only a website and no street address.
Though brokers are intermediaries between you and the lender, it is better to use them because they can give you competitive offers from different lenders, which would be very time-consuming and laborious for you to research.