Mortgage Refinancing Information.
What is and how do you refinance your home?
Texas law allows you to refinance 100% of your present mortgage or if you wish to receive cash from the equity in your home, you may refinance up to 80% of the current appraised value.
Refinancing is one of the ways to possibly save allot of money. What you’re doing is replacing your current mortgage with one with better terms for you! Refinancing can allow you to have a lower rate and therefore having lower monthly payments.
Grove Mortgage provides Cash out refinance, no cash out refinance for homes and commercial properties in Texas. It doesn't matter if it's a home, shopping center or raw land, if it's real estate we can refinance it.
What is Cash out Refinancing?
Cash-out refinances are a popular way for borrowers to access the equity in their homes to pay down consumer debt or make additional purchases. Borrowers need to make a risk-based assessment of whether extracting equity from a home is economical. Borrowers also need to be aware that refinancing a mortgage has costs, including the fact that the lender may charge a higher interest rate on a cash-out refinance than a rate-and-term refinance.
What Does No Cash-Out Refinance Mean?
A no cash-out refinance is also known as a 'rate and term refinance'. It is the refinancing of an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus an additional loan settlement cost. It is done primarily to lower the interest rate charge on the loan and/or to change the term of the mortgage.
If you have a VA Loan please see our VA Streamline Refinance (IRRRL) Loan page.
Benefits of Refinancing:
- Reducing your interest Rate:
- Reducing your interest rate not only helps you save money, but increases the rate at which you build equity in your home, and can decrease the size of your monthly payment.
- Exchange an Adjustable Rate (ARM) for a Fixed Rate :
- If you currently have an adjustable rate and as rates go higher your payment will increase with the market. By refinancing to a Fixed Rate your payments (principal & interest) will not fluctuate with the market or index that your current mortgage is tied too.
- Access to Extra Cash - "Cash Out Refinance":
- Allows you to tap into the equity you've built up in your home. And use it for remodeling your home, paying off high-interest rate bills or for college.
- Removing the PMI:
- If you currently are paying "PMI" and your home has appreciated since you purchased it, you may have more that 20% equity now you can refinance and no longer need "PMI".
- Shortening the Loan's Term:
- When interest rates fall, homeowners often have the opportunity to refinance an existing loan for another that, without much change in the monthly payment, has a shorter term. For that 30-year fixed-rate mortgage on a $100,000 home, refinancing from 9% to $5.5% cuts the term in half to 15 years, with only a slight change in the monthly payment from $804.62 to $817.08.
- Consolidating a 1st and 2nd mortgage into only one:
- Allot of people when they originally bought their home may not have put down a 20% down payment. Therefore they took what is called an 80-20. Meaning that there was a 1st loan of 80% of the value and the 2nd loan of 20% of the value. This way they would avoid paying PMI. The second was usually financed at a higher rate than the first.
- By refinancing both of these notes into one note could allow you to have a lower monthly payment then having a first and second lien on your home.
What are the closing costs involved in mortgage refinancing?
Many times we are able to roll your closing cost into the new loan! Generally costs between 3% and 6% of the loans principal.
Closing costs can be divided into three main categories:
- Lender fees: Fees can include origination, points, application, credit report, and appraisal.
- Third-party fees: These fees vary by state and the actual company you select to close your loan. They can include fees for closing, title exam, title insurance, and recording.
- Pre-paid items: These are items collected at the time of closing but are not really considered costs. They include items you pay whether or not you refinance (for example, interest, taxes, and hazard insurance).
When trying to figure what all the closing cost are going to be, it is best to obtain a Good Faith Estimate (GFE) from your Mortgage Broker. That way you can see a breakdown of all the fees that are being charged.
We would be happy to provide you a Good Faith Estimate for your mortgage refinance.
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