Understanding Los Angeles Refinancing Goals

By Allison E. Beatty
Local Lender Columnist
Dec 20, 2006
There are many reasons to refinance in the current Los Angeles mortgage market. Before selecting a refinancing package, however, think through your objectives.

Refinancing To Eliminate Mortgage Insurance

Many people refinance their Los Angeles homes so they can eliminate private mortgage insurance. This mortgage insurance is usually required when home buyers take out mortgages for less than 80 percent of the home's value. When you increase your equity to more than 80 percent, refinancing will halt these payments.

Looking for the Lowest Mortgage Payment?

Other Los Angeles home owners turn to refinancing to reduce their monthly mortgage payments. While this often is a positive financial goal, consider the broad picture.

Some Los Angeles mortgages are "interest only" loans that have low payments because you are not paying toward the principal. These mortgages are best for people who want a low initial payment and plan to sell or refinance in the short term. If you have other goals for your Los Angeles home, investigate other refinancing programs.

Refinancing To Take Out Cash

Did you know you can refinance to borrow additional funds for home improvement or other expenses? Look for a refinancing program that addresses your needs. Most lenders have mortgages tailored toward such borrowers with more favorable terms.

Reducing Your Mortgage Payment Without Starting Over

If a lower monthly mortgage payment is your goal, don't think that you have to start over. Some lenders will refinance the balance of the loan to lower your mortgage payments.

There are a variety of mortgage refinancing programs on the market. As you consider refinancing, think through your rationale and goals. You then can find the best mortgage program for your needs.

Source
http://www.frbsf.org/

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing columns for 15 years.