What does it mean to “refinance”?

The process of refinancing a home means taking out a new loan to replace a current one. Homeowners who are currently paying off a home loan can apply and be approved for refinancing.

Is refinancing right for you?

Oftentimes, refinancing a mortgage is a good option for a borrower who has not paid off the original loan. Instead of creating an entirely new mortgage, the borrower is able to take out a second loan on the original mortgage. This often leads to lower interest rates. Refinancing is an ideal option for borrowers with good credit scores, but for those with less than stellar scores, it can be a risky action.

If you’re a Southern California homeowner and find it difficult to make high mortgage payments, refinancing might be something to consider. If you can receive a new interest rate that is better by at least 2%, it is generally recommended that you try to refinance and reduce your current interest rate.

Tips for refinancing

We often recommend refinancing to our clients who have good credit scores. The higher the score, the likelier you will be approved for a new loan. Once you have been accepted for a new loan, try to avoid using your credit cards excessively to help prevent your credit score from changing while your application is being reviewed.

Try to submit your final documents to your Southern California broker within 24 hours, and follow up once a week to check into the process. For any further inquiries about refinancing a mortgage, Contact The Forester Team today!

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