Are you entertaining the thought of getting a refinance home loan in Texas? Then you have come to the right place. Refinancing your property is a good idea as it can help you lower interest rates, shorten your loan repayment period, or even tap your equity. If you own a property in Texas, then you should know that it has specific laws and regulations when you apply for refinancing.
Let’s take a look at why homeowners typically apply for refinance home loan in Texas; three factors that weigh in on their decision making as well as a step-by-step guide how to apply for a refinance.
Reasons for Applying for a Refinance Home Loan in Texas:
The reason for refinancing is a personal choice. However, certain factors tend to play a role in motivating homeowners to refinance and oftentimes lead to a surge in refinancing throughout the country.
- Lower Interest Rates:
When interest rates fall significantly, it motivates homeowners to apply for a refinance. Lower interest rates reduce the overall interest paid on the loan as well as help reduce monthly repayments which can end up saving homeowners thousands of dollars in the long run.
- Less Monthly Payments:
One of the most often cited reasons why most homeowners tend to apply for a refinance is to reduce the monthly repayments. Homeowners opt for a new mortgage that offers better repayments, therefore allowing them to manage their expenses in a better manner. Refinancing reduces the burden of repaying huge sums each month.
- No More Private Mortgage Insurance:
Paying PMI in addition to monthly payments can be quite vexing for homeowners. Refinancing and transitioning to a different loan can help to eliminate PMI altogether.
- Switching to Better Loan Options:
When you refinance you have the option to change your loan type. If you are currently paying for an Adjustable Rate Mortgage then you can change it to Fixed Rate Mortgage. By changing your loan type from ARM to a fixed rate, you can reduce the interest rate as well as make repayments more stable. This is because Fixed rate mortgage isn’t affected by interest rate fluctuation.
- Shorten Your Loan Term:
By choosing a new mortgage you can shorten or lengthen your loan repayment period without changing the original amount. You can change your 30-year mortgage plan to 15 years which helps you save time and money.
- Federal Interest Cuts:
Due to the Federal rate cuts happening in the month of September, mortgage brokers are seeing a drop in interest rates. This has led to a surge in refinancing.
The Best Refinance Option Out There: Cash Out Refinance:
Cash Out refinance is an equity-tapping option. What that means is that it allows owners to exchange the equity they have in the house for cash. The cash they receive is given to the owner on a periodic basis instead of a whole lump sum. The cash-out refinance can be used to cover renovation costs, consolidate a standing debt, or can be used on other expenses. But if you are able to itemize the expenses that went towards improving the property, you might be eligible for a tax deduction. Therefore, it is a wise idea to consult your financial advisor to check your eligibility.
Step-by-Step Guide to Apply for a Refinance Home Loan in Texas:
- Assess Your Financial Situation:
Refinancing is a big financial step. Before you apply for a refinancing, you should thoroughly estimate your financial situation. It is a good idea to discuss it beforehand with your financial advisor. Always assess the financial goals that you want to achieve, such as lower interest rates, shorter loan terms, or cashing out your equity. In the state of Texas, the average mortgage rate is 6.5% for a 30-year fixed-rate loan, 5.5% for a 15-year fixed-rate loan, and 7.5% on ARM loans. Therefore, by applying for a refinance home loan in Texas, you can change your financial situation and save thousands in the long run.
- Gather Required Documents:
The documents that you need when you apply for a refinance are similar to the ones you had to submit for your first mortgage. You will need to have:
- Recent Pay Stubs.
- W-2 Forms
- Tax returns
- Current Mortgage Statements
- Property Tax Statements.
- Shop for Lenders:
Applying for a refinance home loan in Texas can be tricky, which is why you need to have a reputable lender by your side. You can either choose your current mortgage lender or find a new one, that is completely up to you. One of the best mortgage lenders in Texas is Dream Home Mortgage. You can avail of their services by simply giving them a call or visiting their office.
- Submit Your Loan Application:
Now that you have all the required documents and a lender, you can apply for a refinance loan. The lender might do a credit check and an appraisal on your property to determine its market value. The application approval takes about 30 to 40 days to process. As you need to maintain financial stability, avoid taking out loans or making unnecessary purchases.
- Review and Sign Closing Documents:
Once your application has been approved, you will receive closing documents that will outline the final terms and conditions. You have to read these documents thoroughly to ensure that there are no changes from the original terms. Sign the documents only when you are satisfied with the given information. After signing, you should prepare to close, as your new mortgage will replace the older one.
Book a Free Consultation with Dream Home Mortgage!
Applying for a refinance home loan in Texas can be quite hectic. You need to have experienced experts on your side who will help you navigate the complexities of the process and secure the best terms. One of the top-rated mortgage brokers in Texas is Dream Home Mortgage. Thanks to the diligent efforts of the Dream Home Mortgage team, under the management of Mr. Hussein Panjwani, thousands of Americans have gained financial freedom. So, what are you waiting for? Book a free consultation today!
