“While today’s low mortgage rates have fueled a refinance boom, it’s been driven mainly by higher-income borrowers. With millions of borrowers eligible to refinance, lower- and middle-income borrowers who could stand to benefit the most from refinancing might be leaving money on the table,” says Sam Khater, Freddie Mac’s chief economist.

To determine whether refinancing makes financial sense for you, it’s essential to first understand the basics. Here’s what to know about the refinancing process:

• Understanding refinancing: When refinancing your mortgage, you are essentially applying for a new mortgage with the goal of securing a loan with better terms than your current one. Primarily, people refinance their mortgages for three reasons: to lower their interest rate, to switch from one product to another (i.e. switch from an adjustable-rate mortgage to a fixed-rate mortgage) or switch to a loan with a shorter term.

• Determining refinancing costs: While refinancing can save you money, it isn’t free. Just as there are closing costs and associated fees with your current mortgage, there are related costs to refinance your loan. To get a sense of what refinancing could cost you, use Freddie Mac’s refinance calculator, which is available at calculators.freddiemac.com.

• Knowing your options: The refinancing option that is best for you will depend on your financial situation and goals. The most common option is to refinance the remaining unpaid balance on your mortgage. Through refinancing, you can improve your financial position by shortening your term or locking in a lower interest rate. Your lender will be able to discuss refinancing options with you and help determine the best solution for your situation.

• Closing your loan: Closing on your new loan is the final step in the refinancing process, a procedure that is almost identical to when you initially closed on your current mortgage. During closing, it’s important that you take your time to read all documents carefully and ask clarifying questions. Once all of the closing documents are signed, you will have a new loan.

For more information on refinancing, visit myhome.freddiemac.com.

Remember, even with today’s mortgage rates near historic lows, it’s important to carefully evaluate your situation and your home goals with a housing counselor or lender.

StatePoint • Contributed

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The apartments are located in Covina, El Monte, Lynwood, Pacoima, Torrance, and Whittier, as well as in San Diego, Riverside and Orange counties.

The properties range in size from five to 54 units.

Arcadia-based Positive Investments invests in multifamily, office and hotel assets.

Capital One Vice President Andrew Kwok worked on the Freddie Mac loan.

“Times like these underscore the value of a longstanding relationship with an experienced borrower,” Kwok said in a statement. “Our working relationship with Positive Investments gave us a jumpstart as we began underwriting each of these loans.”

The loans all have a fixed-rate and five-year term. They will be amortized over 30 years.

“Capital One’s expertise in financing multifamily projects of all sizes is clearly evident in this transaction,” Srinivas Yalamanchili, a principal at Positive Investments, said in a statement. “After completing a nine-property transaction with Andrew’s team earlier in the year, I had every confidence in their ability to execute on the financing of this 17-property portfolio — and they really came through.”

Capital One has announced a handful of other loans in L.A. in the past few months.

In November, the company gave a $20 million Freddie Mac loan to refinance a 36-unit apartment community in Culver City that wrapped construction in 2019 and had a stabilized tenant base by August. The client was a local developer, and the loan is for 10 years with five years of interest-only payments.

Also in November, Capital One provided $13.3 million in Fannie Mae loans, including a $9.1 million loan for the 42-unit Rodney Apartments in Los Feliz and a $4.2 million loan for the 42-unit Crosscreek Apartments in Van Nuys. Both were 10-year, fixed-rate loans.

Hannah Madans • Contributor

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Mortgage rates have recently hit near-record lows and Freddie Mac predicts rates will remain low for the foreseeable future.

If you haven’t already taken advantage of the low-rate environment to refinance your home, experts say it’s worth considering.

“There are lots of reasons to refinance your home mortgage when rates go down,” says Liz Bryant, national sales manager for Wells Fargo Home Lending. “Lower rates can reduce your payment, shorten the overall length of your loan and/or provide you access to cash that you can use for home improvements or other expenses.”

Here are a few things to consider if you’re thinking of taking that step:

• It may make sense to consider if your goal is to reduce your monthly payment as well as the interest you will pay over the life of the loan. A mortgage consultant or refinancing calculator can help you decide. Reducing your payment will free up money for saving, investing or spending in other ways.
• Refinancing can shorten the length of your loan, for example, by reducing your loan from a 30-year repayment period to l5 or even 10. That can allow you to pay the loan off faster and reduce the amount of interest you pay. But depending on your individual situation, it could mean a larger monthly payment.
• Some homeowners refinance to tap into available equity. This can be useful if you’re paying for a large project like a home renovation or are making another large purchase. You should talk to a home mortgage consultant to see if a cash-out refinance fits into your long-term financial goals or whether a home equity line of credit makes more sense for this need.
• If you have built up equity in your home, you may want to consider refinancing to remove mortgage insurance. Typically, you can request your lender to remove mortgage insurance if you show you have at least 20 percent equity in your home. However, if you have a government-backed mortgage, you will need to refinance to a conventional loan to remove your mortgage insurance, which will reduce your monthly payment. You can find more details at yourhomematters.wf.com.
• Finally, if you want to move out of an adjustable-rate mortgage and into a fixed-rate one, refinancing may make sense. Depending on rates, your payment could be higher, but doing so will protect you against rising rates in the future.

“If you’re thinking of refinancing, take some time to do some research and talk to your mortgage lender,” says Bryant. “Refinancing may save you money over the long-term and help you achieve your financial goals.”

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