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Today’s Refinance Loan Options

Today’s refinance loan options are more flexible than ever for those who need to refinance a home in the Bay Area. In an article we posted in 2018, we discussed a forecast by the Mortgage Bankers Association predicting refinances would decline in 2019.

But no one could have predicted the current state of lower interest rates, market trends, and geopolitical developments that have served to push mortgage loan and refinance loan interest rates as low as they have been.

That means that if you want to refinance your California home, now is an excellent time to explore your options with a conventional, FHA, or VA refi loan.

Bay Area Refinance Loan Options: Conventional Refi Loans

There are many reasons why some borrowers choose to refinance their Napa home, Alameda home, or a house in Contra Costa. Some want a cash-out refinance loan to pull equity out of the property in cash. Others may be seeking a shorter mortgage term. Still others want to get out of an adjustable rate mortgage and into a fixed-rate loan.

But one compelling reason to consider a conventional refinance loan for your Bay Area home? Getting out of a mortgage insurance requirement. If you have 20 percent equity in your home or better, refinancing is one way to stop paying Private Mortgage Insurance (PMI). Why refinance instead of just asking the bank to cancel the PMI on your Walnut Creek home?

You will need to apply to have PMI cancelled on a home once the property reaches 20 percent equity, and that application process may have your lender requiring you to get a new appraisal on the property. This can take time and you’ll be paying PMI in the meantime.

If you refinance the loan? You may be able to get into a lower interest rate (depending on current market conditions) as well as cancel your PMI. Saving money twice on a refi transaction is very tempting for borrowers ready to get rid of mortgage insurance and save money on their monthly payments.

Bay Area Home Loan Refinance Options: FHA Refi Loans

After reading the above, why would any San Francisco or Solano County homeowner wish to refinance into an FHA mortgage? The short answer is that it depends on the nature of your current mortgage.

FHA home loans permit non-FHA borrowers to refinance into cash-out or no-cash-out refi loans. 

FHA mortgages in general have lower interest rates, but for those who already have an FHA mortgage, the FHA Streamline Refinance option allows you to get into a lower monthly payment, a lower interest rate, or a shorter loan term. Streamline refinance loans have no FHA-required appraisal or credit check requirements.

FHA cash-out refinance loans are also an option, but recent changes by the Department of Housing and Urban Development have reduced the LTV to 80% for all cash-out transactions with FHA case numbers assigned on or after 1 September 2019.

That is an important change that lowers the amount of cash you can get back on the transaction. If you are contemplating a cash-out refinance, it may be wise to explore your conventional loan options first.

Bay Area Home Loan Refinance Options: VA Refinancing

California has a very large military community. But not all of these military members took out VA mortgages to purchase homes in San Francisco or elsewhere. Refinancing using the VA loan benefit allows eligible homeowners with qualifying military service to refinance property with no out-of-pocket closing costs.

Unlike FHA refinance loans, VA cash-out refinances are at the time of this writing available for 100% of the appraised value of the property. You can refinance a conventional, FHA, or VA mortgage with VA cash-out refinance loans. You do not have to have an existing VA mortgage to refinance into one.

And VA cash-out refinances also feature a Streamline Refinance option similar to the FHA version discussed above. VA Streamline Refinances are for existing VA mortgage loans only.

Talk to a loan officer about these options and many more-now may be one of the best times to refinance if you are ready to explore the possibilities. Call Bridgeport Funding today at (925) 478-8630 for a no-cost, no-obligation consultation.

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