What is a short refinance?

A short refinance is a type of residential real estate transaction in California that is used when a homeowner owes more on their mortgage than the open market value of the property. In a short refinance, the lender agrees to take a discounted payoff of the loan in exchange for the current lender releasing their lien on the property. The homeowner then applies for a new loan with a different lender who is willing to provide the necessary funds to cover the difference between the original loan balance and the discounted payoff amount. The short refinance option is often used when the current loan has a higher interest rate than what is available in the marketplace. This is because the new loan on the short refinance is considered a new loan and not a refinance, as the original loan is actually paid off from the proceeds of the new loan. This makes it possible to obtain a lower interest rate on the new loan. In addition to providing the homeowner with an opportunity to obtain a lower interest rate, short refinances can also help to reduce the amount of the monthly mortgage payments. This can provide the homeowner with additional funds each month to use for other expenses, such as debt consolidation, home improvements, or other investments.

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What is a short refinance?

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