San Jose-California | Mortgage refinance with Lowest Mortgage Rates | No Closing Cost Refinance
The frequency of Refinancing homes in California is very high. Borrowers are hooked on to the net and keep a track of what is going on in the market and a slight indication of mortgage rates coming down. They instantly look for refinancing.Statistics hold that those mortgage borrowers who are very active in refinancing or refinancing more often are often the borrowers who either pay off the mortgage or are smart borrowers.One of the reasons why California mortgage borrowers refinance so often is because cost the cost of living in California is higher than most other states. So saving few a hundred dollars is not a bad idea.The other reason why California mortgage borrowers refinance so often is because the closing cost of the mortgage in California is very less.
Those borrowers who are looking to refinance more often should always go for NO CLOSING COST mortgage. Yes what that means is that nothing is added on to the mortgage in terms of cost as the cost is zero. The borrower only gets to save a few hundred dollars a month without having to pay for closing cost.Some borrowers feel that nothing is free and so there must be some catch. It’s partly true. Assume that you have a 5% rate and you are being offered 4.5% on a mortgage of let’s say $ 400,000 as that is what mortgage loan balance is on average in California as a NO CLOSING COST loan. On a conventional mortgage the closing cost on California refinance would be approximate $ 4000. So the borrower is neither paying that money from his wallet nor is the cost being added on to the mortgage. So basically your principal balance remains the same that is $ 400,000. Had the cost been included or charged the new loan amount would have been $ 404,000.Truthfully what your mortgage expert is doing here is a trade off.
The borrower likes the idea of his mortgage balance not increasing and doing the mortgage for no closing cost. Instead of offering 4.375% to the borrower with a cost of $ 4000 the California mortgage expert is simply offering the rate which is .125% higher at no cost.The advantage to the borrower is that lest say in a matter of 6 months as that is usually the lock in period before a borrower should do a consecutive refinance. The mortgage rates have come down in the market. Had the borrower paid $ 4000 as cost which is included in his mortgage for a rate of 4.375%. Even if the rate can now be reduced to 4%. The borrower will not be tempted because he is now reminded of $ 4000 cost that he just paid or added to his loan amount 6 months back. So to pay another $ 4000 as closing cost would be like paying $ 8000 to reduce the rate from 5% to 4%.
Hence California mortgage borrowers realise that it’s better to go with a no cost loan and take a slightly higher rate than the market rate but go for no cost mortgage so that they can refinance as many times as possible until they have the lowest possible mortgage rate. Let’s take a closer look at the impact. 4.5% on 30 years fixed on a $ 400,000 as NO COST mortgage results in monthly mortgage payment of $ 2026. At 4.375% WITH COST OF $ 4000on a $ 404,000 the monthly mortgage payment would be $ 2017. As a short term view to save 2026 – 2017 = $ 9 paying $ 4000 as cost makes little or no sense. Yes if you stick to the mortgage for 30 years then it does make sense. Like I said. If you are an active borrower who would want to refinance over and over again every 6 or 7 months. You should go for No closing Cost mortgage refinance.
For more information visit www.affordable-payment.com or call 323-705-3191 if you are a California Mortgage borrower or If Texas Mortgage Borrower call 713-463-5181 EXT 154. You can even e mail at roger@affordable-payment.com
Article by Roger Shanker
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