Refinancing Your California Mortgage Loan

Refinancing Your California Mortgage Loan

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers refinancing your California mortgage loan during high rates and soaring inflation. California Homeowners Should Explore Refinancing Your California Mortgage Loan. Homes in California took a major hit during the 2008 Real Estate and Credit Collapse.  Many homes in California, depending on the county the home is located, where home values dropped 30% or more during the Great Real Estate Collapse of 2008.

Homebuyers who purchased their homes in 2010 through 2014 purchased homes at the bottom of the California real estate market. 

These homeowners should explore refinancing their homes to lower their mortgage rates and do a cash-out refinance mortgage. Or if they have an FHA loan, they can see if they qualify for a conventional loan. They can eliminate their expensive FHA annual mortgage insurance premium. This article will cover and discuss Refinancing Your California Mortgage Loan during high rates and soaring inflation.

Refinancing Your California Mortgage Loan To Eliminate PMI

HUD requires an FHA annual mortgage insurance premium of 0.85% for the life of the 30-year fixed-rate FHA loan. With Conventional loans, no private mortgage insurance is required as long as the homeowner has 20% or more equity in their homes.

Homes in California have appreciated double digits in the past few years. Homeowners now have substantial equity in their California homes.

Homeowners with less than 20% home equity will require private mortgage insurance. Private mortgage insurance on conventional loans is much lower than the expensive FHA mortgage insurance premium. Refinancing your California Mortgage may save you tens of thousands of dollars over the term of your mortgage loan.

Basics On Refinancing Your California Mortgage Loan

Homeowners should be refinancing their California Mortgage loan to pay off their existing mortgage loan and take on a new mortgage loan on their California home for several reasons. This section will discuss why refinancing your California mortgage may be beneficial.

One of the main reasons why homeowners go through refinancing their current homes is to lower their current mortgage rates.

Make sure it makes sense. If your monthly reduction in mortgage payments will be $40 per month, but your closing costs out of pocket to refinance is $4,000, this case scenario will not make sense. This is because recouping the closing costs and the break-even point of your refinancing will take a long time. The rule of thumb on refinancing your current mortgage loan is to have a minimum reduction of 0.25% in mortgage rate with no closing costs to be worth it.

 Reduction In Your Current Monthly Payment

Another main reason refinancing may make sense is to lower your monthly housing payment by taking on a longer-term mortgage loan.

The combination of a lower mortgage rate and closing costs should be carefully considered when considering refinancing your California mortgage loan.

Homeowners who currently have a 15-year fixed rate loan and are having difficulty paying their minimum monthly mortgage payment may explore refinancing their 15-year fixed rate mortgage into a 30-year fixed rate loan. The combination of a lower mortgage rate and extending the mortgage loan term can substantially reduce the homeowner’s monthly housing payment.

Refinancing Your California Mortgage Loan: Change In Mortgage Term

Some homeowners opt to pay off their current mortgage faster. Homeowners may want to refinance their current home loan from a 30 year fixed rate loan to a 15-year fixed-rate mortgage.

Another advantage of refinancing to a 15 year fixed rate mortgage from a 30 year fixed mortgage loan is that 15 year fixed mortgage rates are substantially lower than the standard 30-year rate loan programs

Payments may be higher than the 30-year fixed-rate mortgage. However, you will get lower mortgage rates, save tens of thousands of interest expenses, and pay your loan balance in half the time.

Getting A Cash-Out Refinance Mortgage

As discussed earlier, many homeowners who purchased their homes several years ago have equity due to the appreciation of homes in California.  The maximum loan-to-value on an FHA cash-out refinance mortgage is 80% loan-to-value. The maximum loan-to-value on a Conventional cash-out refinance mortgage is 80% loan-to-value.  All cash-out refinance mortgage loans are tax-free and can be used to pay off other bills, do repairs, or do anything the homeowner wants, such as take a long vacation or purchase a second home.

California Housing Market Spike Enables Homeowners For Cash-Out Mortgages


Homeowners with equity due to the huge appreciation in home values in the past several years may consider doing a cash-out California Refinance Mortgage Loan.

  • Many areas of California have home values drop in the double digits back when the real estate market crashed
  • Some home values even dropped as much as 50%
  • There are home buyers who have purchased a home in California at the bottom of the California real estate market
  • The bottom of the California housing market was from 2009 to 2012
  • Homebuyers who purchased a home in California from 2009 to 2012 have purchased their homes at bargain-basement prices
  • California home prices have seen the appreciation of home values year after year without a bounce-back
  • Some California homeowners have seen their home values appreciate more than 30%
  • There are homeowners who have their home values up more than 50% since they bought them

California Homeowners can consider doing a cash-out refinance mortgage.

  • FHA allows up to 85% LTV Cash-Out Refinance
  • Conventional Loans allows up to 80% LTV Cash-Out Refinance
  • VA permits up to 100% cash-out refinance mortgage

FHA Streamline California Refinance Mortgage


FHA has reduced the annual 1.35% FHA annual mortgage insurance premium to 0.85% on January 26th, 2015.

  • That is a 0.50% reduction in FHA mortgage insurance premium
  • Average mortgage loan sizes are much higher in the state of California than other parts of the country
  • Reduction of FHA annual mortgage insurance premium, California homeowners should consider doing a California FHA Streamline refinance mortgage

No income verification is required, no appraisal is required, and no credit scores are required.

California FHA Streamline Mortgage

California homeowners with an FHA loan who have been timely with their mortgage in the past 12 months can save thousands of dollars on the term of a mortgage loan by refinancing to a California FHA Streamline refinance.  Please contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or you can text us for a faster response. Or email us at Or you can also apply online by clicking APPLY NOW and complete the secured 4-page mortgage application to get the pre-approval process started. All of our pre-approvals are full loan commitments that have been underwritten and signed off by our mortgage underwriters. We are direct lenders with no overlays on government and conventional loans.

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