Refinance your California mortgage

Good reasons to refinance

• A lower rate. If today’s rates are meaningfully below your current one, a rate-and-term refinance cuts your payment and the interest you pay over the life of the loan.
• Dropping mortgage insurance. Rising California values have pushed many owners past 20% equity. Refinancing into a conventional loan at or below 80% loan-to-value removes PMI, and moving from FHA to conventional ends the FHA premium.
• Changing the term. Moving from 30 years to 15 or 20 builds equity faster. Moving the other way can lower a payment that has become tight.
• Leaving an adjustable rate. If an ARM is approaching its first adjustment, a fixed rate mortgage locks in a payment for good.
• Removing a borrower. After a divorce or a family change, a refinance takes a name off the loan.

When not to refinance

A large share of California homeowners locked in rates between roughly 2.5% and 4% in 2020 and 2021. If that is you, think carefully before refinancing the whole balance. Here is the math on a $450,000 balance moving from 3.25% to 6.5%: the interest alone rises by about $1,219 a month, before you have taken out a dollar.

If what you really want is cash for a remodel, tuition or debt payoff, a home equity line of credit usually costs far less. It sits behind your first mortgage, so the low rate stays, and you pay the line’s rate only on what you draw. California HELOC rates start at 7.49% APR with lines up to $800,000.

Types of refinance

Rate-and-term refinance changes the rate, the term or both, with little or no cash out. Cash-out refinance replaces your loan with a larger one and pays you the difference, usually up to 80% of the home’s value on a conventional loan. Streamline refinances on FHA and VA loans lower the rate with less paperwork and often no appraisal. See all of them on our refinance loans page.

How to know if the numbers work

Start with the break-even point. Add up the closing costs, divide by the monthly savings, and you have the number of months it takes to come out ahead. If you expect to keep the loan well beyond that, the refinance is worth a serious look. Our refinance calculator runs it for you, and the rates page shows live pricing with real closing costs for your county and credit.

Also look at total interest, not just the payment. Restarting a 30-year term can lower the payment while adding years of interest. A 20- or 15-year term often keeps your payoff date in place.

What you need to refinance

Recent pay stubs and W-2s or tax returns, two months of bank statements, your current mortgage statement, homeowners insurance details and a photo ID. Self-employed borrowers can qualify with bank statements through our non-QM programs. Most refinances close in three to five weeks.

Why refinance with a direct lender that can also broker

Your current servicer will happily quote you a refinance, but it can only offer its own rate sheet. Alameda Mortgage lends directly, and Mike can also price the same loan with several other wholesale lenders on the same day, which often turns up a lower rate or a meaningful lender credit for the identical loan. You still have one point of contact, Mike, from the first quote to the signing table.

We also tell you when not to refinance. If the savings do not clear the costs within a reasonable time, or if a HELOC would get you the cash for less, we will say so and show you the numbers. A refinance should leave you better off, not just with a new loan number.