Low Prime Rates Despite of the drastic effect done by the economic crisis, the Federal Reserve decreased interest rate to record lows. The “prime rate” is the rate that banks lend to each other and serves as a basis for the interest rates of loans available to all consumers. The current prime rate is 3.25 – the lowest since August of 1955. The low interest rate opens the opportunity for the California home owner to refinance their property. However this opportunity will not last long even if the interest rates dropped steadily for the past two years already. Change will be expected at any given time.

California Home Sales Trend In February 2009, almost 43% more homes were sold in California compared to February 2008, ending the trend of falling home prices. Interest rates are projected to increase due to President Barack Obama’s economic stimulus. Aside from that, Treasury Secretary Tim Geithner’s proposed economic reforms hints that the favorable situation for the home owner to refinance their mortgage is apt to change.

A Final Consideration When Refinancing: Flexibility The final reason the savvy California homeowner should refinance their home loan is the opportunity not only to reduce the amount of the monthly mortgage payment, but also to increase the amortization period of the loan itself. While on the surface this may seem unsound financial strategy, the most overlooked consideration of personal financial management is the time value of money.

With more money at hand, the California home owner can have enough to invest in profitable assets to make more money.