Mortgage Refinance in Folsom, California

How Much Does It Cost to Refinance?

Refinancing has closing costs just like a home purchase.

Costs may include:

• Loan origination or lender charges

• Appraisal when required

• Title and settlement services

• Credit report

• Recording fees

• Prepaid interest

• Escrow-related items when applicable

Refinance closing costs often fall in the range of 3%–6% of the loan amount, although your actual costs depend on the loan, property and transaction.

Some refinance structures may allow certain costs to be financed into the new mortgage or offset through pricing, but that can increase the loan balance, interest rate or long-term cost.

What Is the Refinance Break-Even Point?

The break-even point estimates how long it takes for your monthly savings to recover the cost of refinancing.

A simple formula is:

Closing Costs ÷ Monthly Savings = Break-Even Period

Example

Assume your refinance costs are $6,000 and the new mortgage reduces your monthly principal-and-interest payment by $250.

$6,000 ÷ $250 = 24 months

In this example, it would take approximately two years for the monthly savings to recover the refinance costs.

If you expect to sell the home or refinance again before reaching the break-even point, the transaction may be less attractive.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a larger loan and allows you to receive part of your available home equity in cash.

Homeowners may consider cash-out refinancing for:

• Home improvements

• Major repairs

• Debt consolidation

• Education expenses

• Investment or business-related goals

• Other significant financial needs

Cash-out refinancing reduces the amount of equity you retain in the home and increases your mortgage balance.

It should be compared with alternatives such as a Home Equity Loan or HELOC, especially if your existing first-mortgage rate is attractive.

Refinance Requirements

Qualification varies by loan program, but lenders generally review:

Credit: Your credit history and overall risk profile.

Income: Sufficient qualifying income to support the new mortgage.

Debt-to-income ratio: Your monthly obligations compared with qualifying income.

Home equity: The relationship between the new loan amount and property value.

Property: Eligible property type, occupancy, appraisal and title.

Payment history: Your recent mortgage payment history may also affect available refinance programs.

FHA and VA Refinance Options

Homeowners with existing government-backed mortgages may have additional refinance options.

FHA Refinance

Eligible FHA borrowers may be able to use an FHA refinance, including certain FHA Streamline Refinance options.

Streamline programs may require less documentation than a standard refinance, but eligibility, seasoning and borrower-benefit requirements apply.

VA IRRRL

Eligible homeowners with an existing VA loan may qualify for a VA Interest Rate Reduction Refinance Loan (IRRRL).

A VA IRRRL is designed to refinance an existing VA-backed mortgage and generally must provide a qualifying borrower benefit.

Should You Refinance Into a New 30-Year Mortgage?

A lower payment does not always mean a refinance saves money.

For example, if you are several years into a 30-year mortgage and refinance into another new 30-year loan, you may extend the amount of time you are paying interest.

That can lower the monthly payment while potentially increasing the total interest paid over the life of the loan.

I recommend comparing:

• New monthly payment

• Closing costs

• Break-even point

• New loan term

• Remaining term on your current mortgage

• Total projected interest

before deciding.

Mortgage Refinance Process

1. Review your existing mortgage
We look at your current rate, balance, payment, remaining term and refinance goals.

2. Compare refinance options
We evaluate available loan structures based on your credit, income, equity and property.

3. Apply and provide documentation
Income, assets, insurance, mortgage information and other documents may be required.

4. Appraisal and underwriting
An appraisal may be required depending on the program and transaction.

5. Closing
After final approval, you review the Closing Disclosure and complete the new mortgage closing.

Your existing mortgage is then paid off through the refinance transaction.