Despite the pandemic’s harsh impact on the economy, the real estate industry is experiencing historically low-interest rates. Thus, the ability to refinance borrowed loans are offsetting pandemic fear among relieved homeowners. If you’re one of the lucky home-dwellers looking to take advantage of the attractive interest rates, here’s how you can safely refinance in Los Angeles.
What is a Home Refinance?
A refinance replaces your existing mortgage with a new one in an attempt to obtain lower interest rates. Similarly, homeowners who pursue refinancing might also be after a change in loan terms, reduced monthly installments, or a shift from adjustable-rate mortgages to fixed-rate alternatives.
Why Should You Refinance?
Especially now, homeowners need to make deliberate choices regarding their mortgage. Lower interest rates aren’t the only reason they’re an attractive option. Refinanced mortgages might resolve the following problems.
- You need to pay off student loans, high-rate credit cards, and home equity lines of credit.
- You want to reduce payment terms from 30 years to 20 years or lower.
- You want to eliminate private mortgage insurance (PMI).
- You’re experiencing a cash-out problem.
How to Pursue a Refinance
Now that you’ve realized the purpose behind your refinance, it’s time to take a closer look at:
- How you’ll save more interest over time—should you add closing costs to the existing loan balance or shell out personal savings?
- Your expectations regarding the current mortgage—it pays to calculate the break-even point for refinancing.
The Benefits of Refinancing
Overall, the potential gains of refinancing are plentiful. These might include:
- Lowering Monthly Installments. With a refinance, the average homeowner will save up to $160 a month. More savings mean a more significant opportunity to pay off other debts.
- Reducing Loan Terms. If you’re taking out your first mortgage and have ample room for growth within your career, a 30-year loan term makes the most financial sense. However, there may come a time that you’re more than capable of paying off your mortgage sooner. If your income levels have changed for the better, a refinance may be in order.
- Eliminating the PMI. Private mortgage insurance (PMI) comes into play if you settle for less than a 20% downpayment on your home. Despite lower up-front costs, higher monthly payments can get the best of your bank account. Hence, with enough appreciation, you can refinance out of your PMI.
- Switching to and From Fixed-Rate to Adjustable-Rate. Adjustable-rate mortgages fluctuate according to market standards. As such, if stocks skyrocket, so will your mortgage. Switching to a fixed-rate loan can make payments predictable and reliable—easier to budget around.
Ever during uncertain economic times, having an adjustable-rate mortgage doesn’t ensure that you’ll get the best out of your interest rates.
Refinancing Your Mortgage with Shannon Christenot
Particularly in L.A., mortgage rates can become volatile—so why not take advantage of the current situation and refinance? Despite “competitive” rates, not every agreement will represent a good value.
To get ahead of your refinance in Los Angeles, work with experts at Shannon Christenot. If you’re unsure about whether your circumstances are ideal for a refinance, give us a call at (818) 601-2231, and we’ll guide you through the process.