There have been a good number of inquiries as to whether it is time to refinance home loans. Of course, the answer definitely would depend on the whole scenario for each borrower. Our company policy is very different from other mortgage companies. We make sure we get all income/asset/credit information from the borrowers and then make sure that the appraisal value is acceptable to the program selected. Then we formally approve the loan and issue a commitment to the borrowers with a guaranteed rate lock and a guaranteed closing fees. All these processes are done in a matter of minutes, as long as all income information and appraisal value are verified.

With this process, I am able to make sure that the clients fully understand how the process of the loan works. We make sure that you are happy with the whole transaction and advise you with options that will benefit you the most. I wish I could say yes to everyone who wants to refinance their loans. My policy might be conservative, but it is guaranteed that if we take your loan, you will close on schedule and on the rate and terms that we first disclose to you. The only thing I cannot control in a transaction is the title insurance. There are instances when a property has been recorded incorrectly with the county and it could take months to resolve that problem. We would normally know about these things in 3-5 days.

Here are some of the reasons for refinancing:

*If you have an adjustable rate loan where the payments are due to increase, it would be wise to do it now while the rates are low and you can get a fixed rate option loan where you still pay the same amount.

*If you are interested in cashing out money to pay off credit card debts and consolidate your loan. Even if you have those 0% credit card offers, remember you still owe that amount of money and it has to be repaid. Consolidate your debts into one payment and you will be surprised at the savings, not to mention the tax benefits. Remember, credit card interest is always non tax deductible while mortgage interest is tax deductible. Wouldn’t it feel great if you paid Uncle Sam less and had more money in your pocket to enjoy?

*Rates over 7% or higher fixed rate mortgage are also due for refinancing; the current rates as of February 14, 2006 is about 5.75%. You should refinance to a better rate and you might even be able to refinance the loan with no cost. Your rates would be based on your current loan balance. If you have high rates but only have a few years remaining, then we would have to analyze your loan, it might not be worth refinancing. Call me for advice.

*Loans with Negative Amortization are also being converted to fixed rate mortgage. Negative Amortization--where your principal balance increases for the first three years of your loan--must be fully understood. I am surprised with how many callers ask me about their Negative Amortization loan or Option loan payment program and don't understand how they adjust. These loans have their share of disadvantages if you are not aware of them.

*Interest Only loans that are adjustable are definitely the first to go, with the way the market is going it is better to be safe than sorry. A low payment option does not always mean interest only program. There are other fully amortized loans that can offer a lower payment and yet you are paying both interest and principal.

*Combo Loans, paying a first and a second mortgage. If there is enough equity in your property it might be smart to combine both payments into one. A second mortgage is always higher in rates compared to your first loan. A line of credit is even scarier if you took out a large amount and plans to pay it off within 5-10 years. Lines of credit are adjustable loans that were 9% in year 2000, it climbed up 2 full percent in less than a year. It has increased a full 2.00% in the past year. We are currently at 7.50% and anticipating at least another .50% increase in the coming year.

One key point in refinancing is to always get the best value from your appraiser. You can assist your lender by doing a little of bit of investigating yourself. It's always beneficial for you to keep track of your neighborhood properties sold recently. An appraiser can only use comparables that are similar to your property and within a mile radius, so if you happen to see a sold sign or closed escrow sign please inform us that might help us bring more value to your property. Also, the appraiser's information is normally behind by two to three weeks, so if there are very recent closings in your area the appraiser might not be aware of it yet, let us know and we can use that as a comparable for your property.

Another note you should be aware about is that the value for refinancing and selling your property is slightly different. For refinance values, we always need to use closed comparables while in selling your property, you can always go higher than the last closed sale.

Ken Go has been running his southern California home loans business since 1987. His honesty and courtesy equal loyalty to his customers. Forget about "good faith estimates." With 1st Innovative Finance Group, all loan rates and fees are guaranteed upon application. Ken Go writes a California home loans blog for anyone who might want free advice about financing a home with a mortgage. Ken speaks English, Chinese, and Filipino (Tagalog).