Why do people choose to refinance?  Here are some of the most common reasons:

Save Money on Interest Rates

If you got your current mortgage when interest rates were considerably higher than they are now, refinancing could make sense for you.  Refinancing at a lower rate will reduce your monthly payments, and, if you plan to stay in your home for a reasonably long time, these lower payments will more than make up for the costs associated with refinancing.

How much lower should interest rates be?  That depends on how much the refinancing will cost you.  Lenders used to say that a difference of 2 percent or more was needed before refinancing made sense.  But with the newest low-cost and no-cost refinancing options, refinancing can make financial sense even with as little as a 3/4 percent to 1 percent difference in interest rates.

Much depends on your plans and your refinancing options.  You can get a rough idea of how much you could save every month from the estimator on page 3 but be sure to consult a Cal-Bay loan officer for a more accurate and detailed analysis before making your decision.

Convert an Adjustable Rate Mortgage (ARM) to a Fixed Rate

You may have selected an ARM for its lower initial interest rate.  If prevailing interest rates are currently low, you may decide to opt for a fixed rate mortgage. The safety and security of knowing what your monthly payment will be every month is priceless to many people.

Convert Some of Your Equity to Cash

If you've held your mortgage for some time, you will have begun to reduce substantially the outstanding principal on your loan.  That means you'll be able to finance a considerably larger amount than you owe on your current mortgage.  You can use the difference - which can be thousands of dollars - for major purchases, for financing college costs, or to invest in stocks or bonds.  Remember, your home will appreciate the same whether your equity is 10%, 20% or 50%.  Putting your equity to work in other investments may give you a much greater overall return than leaving it in your home.  Before doing this, you should

Build Your Equity Faster

If your financial resources have improved since you obtained your

mortgage, you may decide to convert to a mortgage with a shorter term - perhaps 15 years instead of 30 years.  The monthly payment will be higher, but your overall interest costs will be substantially lower, and if current interest rates are below that of your existing mortgage, your monthly payments may not increase by very much at all.  This can be particularly advantageous as you near retirement.  A shorter loan term may enable you to own your home before you retire.

Seniors

Refinancing into a guaranteed HECM Reverse Mortgage may be just the action to make your "Golden Years" every bit as exciting and enjoyable as you thought they would be.  Why? Because with a  Reverse Mortgage you can ELIMINATE YOUR MORTGAGE PAYMENT FOREVER.  You still have to pay your taxes and insurance, but getting rid of their monthly mortgage payment has solved the cash flow problems of many of our senior clients.  Let's face it.  The financial debacle of the past 4 - 5 years has devastated they assets of many seniors.  Other seniors were never able to save enough money in their working years to have a comfortable retirement.  Go to REVERSE MORTGAGES for more information and CONTACT US to discuss your personal situation.

"How much will I save every month?"  It's the first question most homeowners ask when considering refinancing.  And with all the options in today's refinancing packages, the only way to get a definitive answer is to discuss your particular situation with a qualified loan officer.

For a quick estimate of what you can save, this chart can give you a good idea of the monthly payments you'd make with a new interest rate.

Instructions

1.  Find your new interest rate in column 1.

2.  Choose the appropriate payment factor from column 2 or 3:

a)  Use column 2 for a 30-year fixed rate mortgage or an ARM;

b)  Use column 3 for a 15-year fixed rate mortgage.

This is the monthly principal and interest for $1,000 of a mortgage loan.

3.  To figure your approximate monthly payment, multiply the payment factor by the amount of your mortgage without the last three zeros.  (For example, if your mortgage is $120,000, use 120.)

EXAMPLE:  It's the year 2010 and the world has discovered the key to economic security.  As a result, 30-year fixed rate mortgages are now available at 4-3/4 percent interest.  You want to know how much your monthly payments would be on your $150,000 mortgage.

STEP 1:  Find 4-3/4% in column 1.

STEP 2:  Find your payment factor in column 2 (30-year fixed rate:  $5.22.)

STEP 3:  Multiply your payment factor by the amount of your mortgage without the last three zeros.  ($5.22 x 150 = $783.00.)

STEP 4: Compare the answer to current principal and interest payment to see roughly what the savings might be.

Payment Factor Chart

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W-2's for ______________________

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Original Pay Stubs For Last 30 Days (Showing year-to-date earnings, name and Social Security Number)

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Most Recent 2 Years Tax Returns (With all schedules and signed in blue ink)

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Year To Date Profit and Loss Statement and Current Balance Sheet (If self-employed only)

Information on Employment History (for the last 2 years - addresses, dates and phone numbers).

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Information on Residence History (For the last 2 Years - addresses and dates)

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Coupon Book or Most Recent Statement on All Mortgages and Credit Cards we are paying off.

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3 Months Bank Statements for All Accounts (If any recently opened accounts or sizeable deposits, bring documentation to providing proof of the source of the funds)

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Transcript, Diploma or Military Discharge Papers

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Addresses, Loan Information and Any Leases on Real Estate You Currently Own

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Current Landlord's Name, Address and Phone Number or 12 Months Cancelled Checks (If you currently rent)

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Check for Credit Report ($17.00)

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The last Closing Statement from your last refinance.

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Complete Divorce Papers Including the Interlock and Final Decree of Legal Separation Agreement (If you pay/receive child support or alimony)

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Relocation Agreement (If you are being transferred into the area)

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Bankruptcy Papers Including Schedule of Creditors and Discharge Papers (If applicable and relevant)

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Award Letter and Copy of Most Recent Check (If you receive Social Security, retirement or disability income)

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Pink Slip(s) on Car(s) (If cars are 5 years old or less)

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Copy of Driver's License and Social Security Card (FHA only)

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Original Certificate of Eligibility and DD214 (VA only)

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Homeowners Insurance, Agents Name and Number, Declarations Page