People refinance their mortgage loans1 for many reasons, most of which involve saving money. Although less complicated than buying a home, a refinance still requires time and extensive documentation. It's a good idea to crunch the numbers first to determine if potentially resetting the clock on your mortgage will actually save you money in the long run.
Refinancing your home is a good way to restructure your debt to meet changes in your circumstances. Common reasons for refinancing are lowering your monthly payment, switching from an adjustable rate to a fixed rate, or even taking cash out to consolidate other higher-interest loans.
Times change, people change, and circumstances may have changed since you first signed your mortgage. Now might be the perfect time to refinance, but you need information to make that decision. Sign up for mortgage emails and let us answer your questions!
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First, talk to your potential lender to estimate your closing costs, then use a mortgage calculator to determine whether a refinance will either save you money compared to your current mortgage. Sometimes a refinance will save you money in the long run but increase your payment; in other scenarios, both payment and rate decrease.
There might be many different costs associated with a refinance including a title search, a loan origination fee, an underwriting fee, an appraisal and more. One of our mortgage specialists can walk you through what is involved and let you know what the costs are likely to be before you commit to a decision.
Since you are basically creating a whole new mortgage, you can decide the loan terms. If you want to make a shorter mortgage—say 15 years—to pay off the new loan, you can do that. Or you can keep your payments low and keep the mortgage at 30 years. Since CUTX has no prepayment penalty, you can have the best of both worlds with a 30-year mortgage but just pay extra on the principal each month. We will work with you on structuring the loan.
The law in Texas is that your cash-out mortgage refinance must be limited to 80% LTV (loan-to-value). For example, if your mortgage balance is 60% of your home value and you have earned 40% in home equity, the state of Texas will allow you to cash out 20% of your earned home equity.
If you have a lot of equity in your home, you can use it for loan consolidation, home improvements, or financing a large expense. Talk to us about a Home Equity Loan or HELOC if you're interested in accessing your home's equity.
Mortgage refinances typically take 30 to 45 days, but sometimes they can happen faster. Much of the time depends on how fast you can get the required documentation to your mortgage loan processor. The closing costs depend on several factors including the amount you're refinancing. Talk to us so we can help estimate those costs!
1. NMLS #576560 Credit Union of Texas provides mortgage loans through its affiliate Texas Mortgage Lending, LLC, NMLS #1641703. CUTX home loan programs are only available in Texas. Loans are subject to credit approval, CUTX's lending policies, and property approval. 2. ARM loans are variable rate loans; interest rates and payments may increase after closing.
