Obtaining the lowest mortgage interest rate during a real estate refinance can be very challenging. In California, home values have been declining, so the first thing you will need to consider is whether or not you have any equity. If you bought your home in California with little or no down payment in 2005 or later then you probably do not have sufficient equity to refinance your existing mortgage. In California generally you need to have at the minimum 10% equity if you owe $417,000 or less on your current home loan. For loans over this amount you may need more equity. Once you have determined that you have sufficient equity to refinance you will need to find a lender with a good rate.
If you use a mortgage broker they will shop a large of number of lenders to determine which one has the lowest interest rate for your refinance. There are three things to consider when requesting interest rate quotes. The three elements are the interest rate, points and fees. Interest rates are easy to compare, the lower the better. If you are considering paying points make sure you understand where the points are being applied. Paying an origination fee is usually not a good idea unless the mortgage broker is taking no provide from the lender. It is generally a good idea to pay points toward buying down the interest rate if you are planning on keeping the mortgage for five years or longer. It is important to remember that it is not the house you need to consider keeping, it is the loan.
Lastly, you want to make certain you have been provided a detailed break out of the fees you will be paying at close. Junk fees are charges that have been additional to the closing costs to increase the profit the lender makes. Usually the closing costs are between 1 and 2 percent of the loan amount. So if you are borrowing $100,000 you should expect to pay between 1 to 2 thousand dollars in closing costs. You may be able to negotiate the closing costs based on how motivated the broker is to earn your business. Good luck and happy hunting.