Refinancing a Home the Smart Way: What, When, and How

Dan Barcelon
Published on July 15, 2017

Refinancing a Home the Smart Way: What, When, and How


You may have seen commercials on TV about refinancing a home mortgage, or perhaps friends or neighbors have talked about refinancing their own mortgage. If you have never applied for a home refinance loan in the past, you may not be certain what this is or how you can benefit from it. Refinancing a home mortgage is a significant move to take that can have far-reaching effects in your life. However, it also can be highly beneficial at times. With a closer look at what refinancing is and when it is most beneficial, you can make a more educated decision about how to handle your finances.

What Is Mortgage Refinancing?

When you are refinancing a home loan, you are essentially applying for a brand new home loan. Your new loan will completely replace your existing loan or loans. Through a home refinance loan, you can change all aspects of your loan terms. This includes your loan amount, payoff date, interest rate, mortgage payment and term. There are many reasons why some homeowners refinance their mortgage once or several times over the course of their years in the home, but refinancing  a home mortgage is not right for all situations. You must carefully compare potentially new loan terms against your current financing to find the best option available.

What Can You Accomplish By Refinancing Your Home Loan?

Because all aspects of your home loan terms are changed when you refinance your mortgage, you can enjoy substantial benefits through this process. One of the most significant accomplishments that you may enjoy is lowering the mortgage payment. This can be accomplished when you have a lower loan balance, when the interest rate is lower and by other factors. Some people refinance their home loan to pay it off more quickly. For example, if you have 23 years left on a 30-year mortgage, you could refinance to a 15-year term loan. By doing so, you could pay off your mortgage eight years earlier. This may assist with retirement planning and other financial goals that you want to achieve. Many people also refinance a home loan to pull equity out of the property. Over time, you may have built up equity through property value appreciation and mortgage debt reduction. By cashing out your equity through a new home loan, you may be able to use your funds for investments, to pay off high interest rate debts, to send the kids to college and more. Remember that refinancing a home loan often yields multiple benefits rather than just one. However, just as a new rate can be lower and a term can be more attractive, the opposite is also a possibility. You should never assume that refinancing a home always yields advantageous terms. Instead, you should shop around to find a great home loan that is advantageous for you.

What Are the Costs Associated With a Mortgage Refinance?

As beneficial as refinancing a home mortgage can be in certain situations, this is usually not a free process. Any time you apply for a new home loan, including a refinancing a home loan, you may need to pay lender’s fees, title company fees, recording fees and more. Your lender may also require you to update your insurance policy and to prepay the premium and to order a new appraisal. Some people may need to pay a few thousand dollars in fees in order to complete the refinancing process. However, many of the fees may be paid for through cash-out proceeds. Because each loan program is unique, it is important to determine what your fees will be and which fees must be paid up-front.

How Can You Determine If Refinancing Is the Right Move to Make?

With many benefits as well as substantial costs associated with refinancing a home mortgage, you may be wondering if this is the right move to make with your home. Refinancing a home is usually a smart idea if it helps you to accomplish major financial goals or to live more comfortably. For example, by lowering the mortgage payment, you may improve your budget and increase the amount of money that you can save each month. Because there are costs, however, refinancing a home is usually not a smart idea if you plan to sell your home soon. After all, you will need time to recoup the costs through lower payments or other benefits.

When Should You Avoid Refinancing Your Home Loan?

A home loan refinance makes excellent sense for many homeowners, but this is not always the best idea. For example, if you are currently growing out of your home or if your home is larger than you need, it may make more sense to let a Realtor list your current home for sale. Then, you can apply for a new home loan on a property that is more well-suited for your current needs and budget. You may also avoid refinancing a home loan if you plan to move within a couple of years or less. A final point to consider is the market. If rates are projected to decrease in the near future, it may be wise to delay applying for a refinance loan. As you can see, refinancing a home makes excellent sense for some people when conditions are ideal, but it can also be costly and detrimental for others.

At Evergreen Properties and Investments, our team of skilled Long Beach area real estate agents is dedicated to helping you with all of your real estate needs. We can provide you with a market analysis of your home so that you can better determine if you should sell the home or refinance it. Regardless of how you plan to proceed, we can assist you. For example, we can connect you to a reputable lender to refinance your home loan, or we can begin helping you to list your property for sale. Now is a great time to set up a consultation with one of our team members, so call our office today.

From the Author: My name is Dan Barcelon and I believe that Real Estate can be one of the most valuable assets you’ll ever own. I’m dedicated to educating and guiding my clients on how to manage and leverage their homes to create an Evergreen legacy for themselves and their family. I primarily consult both home buyers and home sellers on reaching their personal and financial goals through Real Estate in the following cities of Southern California: Long Beach,  Carson,  Cerritos,  Signal Hill,  Torrance,  Lakewood,  Cypress,  Downey,  Bellflower,  Norwalk,  Wilmington,  La Palma,  and Artesia.

If you’d like to discuss if buying, selling, or investing in real estate is right for you at this time, feel free to reach out. You can call/text me at 562-270-5812, or you can e-mail me at


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Luke Skar – Know What Questions to Ask Your Mortgage Lender

Anita Clark – Things To Consider Before Refinancing Your Mortgage

Teresa Cowart – Home Mortgage and Refinance Scams to Watch Out For

Refinancing a Home the Smart Way: What, When, and How
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