Refinance Your California Mortgage

You already have a mortgage, and something about it no longer fits your life. Maybe the payment is too high, the term is too long, or you need cash and your house is holding most of it. A refinance pays off your current loan with a new one on different terms. Advanced Funding Solutions is a mortgage brokerage, so we compare refinance offers from 100+ wholesale lenders, and the lender you choose funds the new loan.

The Three Kinds of Refinance

Most homeowners want one of three things, and each one has its own kind of refinance. A rate and term refinance changes your rate, your term, or both, and keeps your balance about the same. A cash out refinance gives you a bigger loan than you owe and hands you the difference at closing. A streamline refinance is a lighter paperwork option for existing FHA loans and VA loans, with rules set by HUD and the VA. The VA calls its version an Interest Rate Reduction Refinance Loan, or IRRRL.

How a Refinance Actually Works

If you remember buying your house, most of this will feel familiar, only shorter. You apply, the lender checks your credit and income, and the home usually gets appraised so the lender knows what it is worth. That value sets your loan to value (LTV), which is your loan size compared to what the home is worth. LTV decides how much cash you can take out and how your new loan gets priced. On a home you live in, federal law also gives you a short window to cancel after you sign.

What a Refinance Costs You

If a lower rate is tempting you, the closing costs decide whether it actually saves you money. Every refinance has them. Divide what you pay to close by what you save each month, and you get your break even month. If you sell or move before that month, the refinance lost you money. A new full length loan also restarts your payoff clock, so a smaller payment can still cost more over the life of the loan. We do not publish rates because they move daily. The funding lender quotes your rate and costs in writing when you apply, and you can check your numbers on our payment calculator first.

Refinance or a HELOC

If you need cash but love the rate you already have, a cash out refinance may be the wrong tool. It replaces your whole first mortgage, rate and all. A HELOC or home equity loan sits behind your current mortgage as a second loan, so your first rate stays put. The refinance makes more sense when your current rate is higher than today's offers, or when you want one payment instead of two. We will get both priced for you side by side.

When Your Income Is Hard to Prove

You might own a business, live on rental income, or show less on your tax return than you actually earn. A non qualified mortgage (non QM) is a loan that qualifies you on something other than tax returns, and some lenders offer it as a refinance. A bank statement refinance uses 12 or 24 months of deposits. A DSCR refinance, short for debt service coverage ratio, qualifies a rental on its own rent. Once two years of tax returns support your income, some borrowers refinance again into a conventional loan.

When Refinancing Is the Wrong Answer

Sometimes the honest answer is to keep the loan you have. If your rate is already lower than what lenders offer today, a rate and term refinance will not help, and a cash out refinance would trade that rate away. If you are moving soon, you may never reach your break even month. And if you are only a few years from paying off the house, restarting the clock can cost you more interest even with a lower payment. Talk to us first, and we will tell you plainly when that is you.

Not sure which of these fits? Tell us about your current loan and what you want it to do, and we will tell you whether refinancing helps before you apply anywhere. Advanced Funding Solutions works with homeowners across California by phone and email.