California Platinum Loan Advice: How Can We Quickly Determine If It Is Financially Prudent for Us to Refinance Our 30-Year Mortgage?

Refinancing a mortgage is a lot of work. But if you’re thinking about it, there are a few situations where your financial results will be well worth the effort. If you’re wondering if it makes financial sense for you to refinance your 30-year fixed rate mortgage, we’ve put together some factors to consider that will influence your decision.

Can you lower your mortgage interest rate?

Even if you lower your mortgage interest rate by less than 1%, you could benefit financially by refinancing your 30-year mortgage. If you’ve got a substantial mortgage, a rate reduction of .25% could save you money. You could be surprised to learn that your closing costs will be modest. The money you could save over the life of your mortgage will add up to more than just pocket change. If you have less than 20% equity in your home, you’ll also need to include mortgage insurance in your calculations.

You may also be able to locate refinancing options with low to minimal closing costs, including a VA Streamline or IRRRL refinance loan for Veterans and an FHA Streamline refinance loan.

Should you refinance an adjustable rate mortgage (ARM) to a low fixed-rate mortgage?

As this article is written, home loan interest rates are low, and few people are opting for adjustable rate mortgages (ARMS). But if you have an older ARM, it could make financial sense for you to refinance it to a low fixed-rate 30-year mortgage. There’s no guarantee that mortgage interest rates will remain low. Locking in your interest rate at a low APR could make excellent financial sense.

Can we refinance our mortgage to reduce our debt burden?

If you have significant equity built up in your home, you may be able to use a cash-out refinance to use the funds to pay down high interest-rate debt. If you’re paying off high-balance, high-interest rate credit cards, you could save thousands of dollars by using a cash-out refinance. This option makes sense only if you have enough equity in your home and can continue to keep your monthly mortgage payments affordable.

Finally, you may be able to refinance your mortgage by shortening the term of your loan. If you plan to stay in your home and can afford the monthly payments on a 15-year mortgage instead of a 30-year mortgage, you will save thousands of dollars by cutting the loan term in half. Contact us here at California Platinum Loans to find out if a refinance makes financial sense for your particular situation.




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Is Now An Opportune Time For You To Upgrade Your Home Such as Adding A Rental Unit or Other Improvements To Your Property?

With property values continuing to rise in nearly every California neighborhood, adding an accessory dwelling unit (ADU) continues to be way to increase the living space in your property and potentially increase the value of your home. So, is this the year you decide to make a big change and add an ADU to your property? Could you convert your garage to additional living space, add a “granny flat” or otherwise expand your home?

Decide what your goals will be for the ADU

Before you start the process of planning an ADU, getting the required permits, and obtaining financing, decide why you want to add it in the first place. Do you have family members who will move in once you have space for them? Or is your family crowded already, and could use the extra space? Each situation dictates a different timeline.

If you’re planning to add an ADU and use it as a rental, are you in financial need, or are your plans more along the lines of increasing your property value over the longer term? If you’re looking to increase your property’s value with an ADU, your project may not be as urgent as one which will accommodate family members or serve as a rental.

Your home value vs. the cost of the ADU

According to Zillow, home sale prices in the Los Angeles-Long Beach-Anaheim metro area are going to increase about 1.4% in 2020. This isn’t quite as much as Los Angeles proper, where home values are set to increase by 3.5%. With median sales prices in the metro area of $443 per square foot compared to the average cost of building an ADU at about $300 per square foot, you will increase your home’s value by about 50% — on average. ADU projects can vary in cost and benefit to your property, so all of these calculations can change.

Interest rates are predicted to hold steady for 2020

Fannie Mae, Freddie Mac, and other home loan corporations predict that interest rates will probably hold steady in the year to come. If you want to increase the space your home has for your family or add value to your property, 2020 can be an excellent year to start a home renovation project adding an ADU. Work with an experienced home lending professional to learn what your options are in an ADU.


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