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Northern California Homeowners Face Financial Challenges

By Karen Lawson
Local Lender Columnist
May 22, 2008
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Many Northern California homeowners are faced with finding new ways to stretch their budgets. Rapidly escalating gas and fuel prices, long commutes, and decreasing home values are creating new challenges. Refinancing your mortgage can be a first step toward regaining control of your household finances.

How Refinancing Can Help

Depending on the terms of your current mortgage, refinancing may provide more favorable rates and/or long term interest savings. It may also be possible to lower or stabilize your monthly payments. If you're concerned about predatory lending, or unfavorable mortgage terms, your best defense is to shop around for refinancing and to ask plenty of questions. Taking a list of questions along can help you get the information you need from mortgage lenders. Here are some things to keep in mind when considering refinancing:

Understand the difference between interest rates and APR: Lenders will quote interest rates on various mortgage products they offer. However, extra fees and charges can add considerably to the cost of mortgage financing. By law, lenders must provide a statement showing the annual percentage rate, or APR, of all costs associated with refinancing your mortgage.

Consider Your Overall Financial Situation: If you are carrying high interest rate consumer debt on credit cards and other loans, you may be able to refinance and use equity to pay off these debts. Compare the APR shown on your credit card statements with the cost of refinancing. There may also be tax benefits involved in this type of refinancing, so consulting your tax advisor is recommended.

Home values tend to move in cycles, so if you can't get the refinancing package you want immediately, mortgage lenders may be able to help in other ways.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno.