With interest rates at an all time low, many new changes to available mortgage programs, and refinancing dropping in cost over the last few years, it's never the wrong time to think about a new loan! Even if there are some "up-front" costs (which can usually be incorporated into the new mortgage loan), refinancing has a number of benefits that make it worthwhile many times over.

Even though San Diego County has been hit hard by falling home values, you are welcome to contact us to find out how we may be able to make sure you have the best loan program available for your situation.

When you refinance, you might be able to lower your interest rate and monthly payment -- sometimes significantly. As important, over the term of the loan this can save you hundreds of thousands of dollars. If you have built up equity in your home you might be able to "cash out" some of the built-up equity, which you can use to pay off credit cards or other loans, consolidate debt, improve your home, take a vacation,etc.

All these benefits do cost something, though. When you refinance, you're paying for most of the same things you paid for when you obtained your original mortgage. These might include an appraisal, lender's title insurance, underwriting fees, closing costs and so on. All of these costs will be explained to you in writing and up-front by Heritage Mortgage. In some instances we can do a "no-cost" loan with fewer costs to the borrower.

If your current loan has a "pre-payment penalty" you might have to pay a penalty if you refinance your previous mortgage too quickly. That depends on the terms of your existing mortgage. More often than not when you have one of these penalties on your current mortgage it applies only for the first year or two. We'll help you figure it out.

You might pay points to get a more favorable interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the life of the new mortgage can be significant. You should be aware that the IRS has recently said that points paid for the purpose of refinancing your mortgage cannot be deducted in their entirety in the year you pay them, unless the refinanced loan is primarily for home improvements. Consult your tax professional before deducting points you pay on your new mortgage from your federal income taxes.

Speaking of taxes, if you lower your interest rate, naturally you will be lowering the amount of mortgage interest payments you can deduct from your federal income taxes. This is another cost that some borrowers consider. We can help you do the math!

Ultimately, for most people the amount of up-front costs to refinance are made up very quickly in monthly savings. We'll work with you to determine what program is best for you, considering your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing might have on your taxes.