There are mainly 2 reasons why most people want to refinance (paying off your current loan entirely and replace it with a new loan with new terms):

Lower your interest rate

Before you rush to refinance, we need to make sure it is really saving you money.  We will have to take into account the cost, how long you plan to keep the home, how long you have been paying down the existing mortgage, etc.  If you are considering a refinance, reach out to us and we will do the calculations for you.  We will not recommend you to refinance unless it is actually saving money.


Getting cash out of the property

As property value goes up, homeowners will have considerable amount of equity in their home.  Some lenders will lend up to 80% of the appraisal value of the home.  For illustration, say your home can be appraised at $1mil, the lender might consider lending up to 80% of $1mil on the home = $800K.  After paying a current loan of $500K, the homeowner can have up to $800K - $500K = $300,000 cash he/she can take out to remodel their home, purchase an investment property, invest in other investment vehicles, buy a car, pay for kids’ college etc.  For tax deductible benefit, please consult your CPA.


Other reasons people might want to refinance


Removing someone from the loan and title of the property

For example when a divorce happens, one spouse might want to refinance to pay off the other spouse, get him/her off the mortgage and the title of the home.


Shorten the term of the loan

Homeowner might decide to reduce the monthly payment.  Instead of paying the loan off in 15 years, they might want to pay off in 30 years hence a lower monthly payment.


1601 S. De Anza Blvd. Suite 260 Cupertino CA 95014  


Tel: (408)645-7002


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