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Mortgage Refinancing in Dallas Texas | What You Need to Know

Refinancing your mortgages gives homeowners more flexibility, in terms of lower payments. As well as an ability to pay off their mortgage loan faster. 

Are you considering refinancing your mortgage? Well, there are several important things you must know before opting for a mortgage refinance from a mortgage company in Dallas, Texas.

This article is going to be your ultimate mortgage refinancing guide, as we are going to tell you all you need to know about mortgage refinancing in Dallas Texas. So, let’s begin…

What is mortgage refinancing?

Refinancing your mortgage simply means to trade your old mortgage with a new one, that too with a new balance. When creating a new mortgage, the original loan would need to be revised. However, this doesn’t mean you’ll end up with two mortgages. 

This is because the process of refinancing a second mortgage is being rated at the same time the first one is being paid off. When one does this, the bank or lender pays off their old mortgage with a new mortgage. Hence, the term ‘refinance’.

Individuals usually refinance their mortgage in order to reduce monthly payments, interest rates, and also to change their mortgage provider.

Who can qualify for a refinance mortgage?

Who can actually qualify for a refinance mortgage depends on your lender’s requirements. However, in most cases, lenders would want to see if you have continued your first mortgage for a minimum of a year. 

After that, they will consider refinancing your mortgage. It is important to know that ideal candidates for mortgage refinancing have a minimum of 3%-20% equity in their homes. This percentage also includes a regular income flow.

Furthermore, lenders who will be providing the mortgage refinancing will also take a look at your current income flow and debt and will determine whether your loan payments will affect your new mortgage payments or not. This is done in order to ensure that each homeowner has enough money to pay the current and future loans and bills with ease.

Lenders also take a look at the credit scores of the homeowners. By doing this, the interest rate can be determined. When a homeowner has a high credit score, this means they will get a lower interest rate.

When is the ideal time to refinance your mortgage?

Wondering when is the ideal time to refinance your home mortgage plan?

The ideal time to refinance your mortgage is when you want to make your mortgage loan better. It would be rather undesirable to refinance your mortgage when you want to buy yourself a brand new car with that extra money.

Here are several circumstances when it would be the best time to refinance your mortgage. Especially when you have an interest-only loan, Adjustable Rate Mortgage (ARM), and a mortgage that is more than a 15-year term. These instances are prime times to make a good financial move.

Therefore, your ultimate goal should be to lock your fixed interest rate of a 15-year mortgage loan that will come with a brand new payment plan. Moreover, this would be at least less than 25% of your current monthly income flow.

To understand all this better, you can consider making a break-even analysis. Refinancing your mortgage is a quick and easy decision if you know that you’ll be living in your home for enough time in order to get all the monetary benefits, by having a lower interest rate and lower payment.

What you should do is determine how long you will be living in your current house. Also, if you want to live in that house forever, even after retirement. Then, analyze how much time it would take for your monthly savings to break even with all the costs that you are paying with the refinance.

How much will a mortgage refinance cost you?

It is important to know that mortgage refinancing has its own costs. It does not come for free. Therefore, apart from the fees and money you will be paying to your lender, you will also be charged for all the other legal documents, application fees, title searches, filings, credit checks, appraisals, and several other fees.

There is no formula you could use that can help you calculate how much you will have to spend. And how much you will be charged in order to refinance your mortgage. This is because the charges will depend on your property, your home’s location, as well as the refinance deal you will be agreeing to with your lender. But, in most cases, the charges can be anywhere around 3%- 6% of the total mortgage amount.

But, you can definitely use a refinance breakeven calculator in order to calculate and estimate the cost of your house in Texas Dallas.

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