Have you heard the old adage in the mortgage business that states when its a good time to refinance your home? The magic number was two percent (2%). If you could lower your interest rate by at least 2% then its a good time to refinance your Texas mortgage.
While this may be a good 'general' rule of thumb, the truth is that there are MANY reason to refinance your Texas mortgage. I've taken the liberty to list a few for you, but please feel free to add a few of your own.
Lowering Your Mortgage Interest Rate - Alright, this was an easy one. Obviously, securing a lower interest rate is one of the top reasons for refinancing your current mortgage. Overall, this can make a big difference in your monthly 'out-of-pocket' costs and save you thousands of dollars in financing fees.
Build Faster Equity - If you are currently in a position where you can make higher monthly payments due to an increase in your salary or other good fortune, you may want to refinance your mortgage from a 30 year fixed rate Texas mortgage, to a lower rate and shorter term, like a 20 year or even a 15 year loan program. Lowering your term allows you to build your equity faster and can save you a tremendous amount of money on financing fees.
Change Your Loan Program (not just to a shorter term) - Some homeowners start out with an Adjustable Rate Mortgage (ARM) program which typically starts with a lower fixed rate mortgage and then adjusts after the first 3, 5, 7, or 10 years (depending on the program). The interest rate then adjusts every 6 months to one year, depending on the mortgage product, for the remainder of the loan term. While this is a fine product for some individuals, many homeowners make the switch to a fixed rate product for the stability of the rate and payment. When reviewing your mortgage options, be sure to very if you ask appropriate questions to understand the loan program.
Your Credit Score Has Improved - Perhaps you had a few blemishes in the past but have taken some time to improve your credit scores. You should not be stuck with a higher mortgage interest for the remainder of your loan term. Improving your FICO score from 70-100+ points can make a difference in your mortgage interest rate, and even your homeowners insurance. Not all Insurance Companies quote based on FICO scores. If your insurance company does, be sure to inform them of your improved scores. As for the mortgage rate itself, you can see an improvement between .500% and .750% (the range is based upon FICO score, Loan-to-Value ratio, and loan product).
Utilizing Your Equity - A cash-out refinance allows you to tap into the equity you have built up in your home. Many use this option to pay off revolving credit card accounts with 18%+ interest rates, or to send a child to college, or to use the money for home improvements (just to name a few).
Whatever your reason is for refinancing, just be sure to work with a mortgage professional that takes the time to understand YOUR needs. In addition, be sure to take the time to understand the mortgage product before agreeing to move forward.
Already in the process of refinancing or purchasing your home? Be sure to check out my tips on what to do and what not to do during the mortgage process.
I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice. If you are available to talk, I am available to listen. Give me a call or visit my website for more details.
Do you want to know all of your mortgage options? Call me today and let's discuss them further.
Always available for your Texas Mortgage and Home Loan needs!
John R Cannata P#214.728.0449
NMLS # 322646
The views expressed on this site are mine alone and do not reflect the views of my employer.