When to Refinance Your Home Mortgage Loan

One of the most important questions for any homeowner considering refinancing is how do you know when the time is right for refinancing? Fortunately, there are a few key factors that will help you determine the best time to refinance your home mortgage.

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First, the basic rule of refinancing is to make sure your property is worth 10 percent more than your loan amount.  So for example if your California home is worth $450,000 by up-to-date estimates and you have paid at least $45,000 on the home, then it would be a good time to refinance.  In certain situations if you have private mortgage insurance you may be able to refinance with only 5 percent of your loan amount.

The second factor in determining when refinancing is right for you depends on market conditions.  Unfortunately homeowners don’t have any control of this determinant and can only benefit by staying up to date with interest rates.  Annual percentage rates or APR is the interest rate on your mortgage loan and is easily determined by adding the interest to be paid and any other fees to your principal loan amount. In recent years interest rates have been at extremely low rates and sometimes even record setting.  While this has changed and rates are on the way back up, lenders are still competing for homeowners attention and offering very good refinancing options.  So you can still benefit from market conditions but you should compare annual percentage rates from different lenders in order to ensure you get the best mortgage refinance rate available.

So in general there are two key considerations to keep in mind before refinancing. First, if your home is worth 10 percent more than your loan amount and second if current interest rates are at reasonable levels for you to lower your monthly mortgage payment.