Houston Refinancing

Take Advantage of Lower Mortgage Interest Rates

Sometimes when we’re ready to buy a home, interest rates are not as low as we’d like them to be. Some buyers take this as a sign that it just wasn’t meant to be. Others go ahead and get a mortgage at a high fixed rate or an adjustable rate.

Waiting it out might seem like the smartest option, and sometimes it is. But if you’ve found your dream home and are able to make the payments, unfavorable interest rates shouldn’t stop you from buying. While you will have higher interest and monthly payments, chances are you won’t be forced to deal with it for the life of the loan.

How Refinancing Can Save You Money

Refinancing is something that is often considered when homeowners want to cash in some of their equity, but that’s not the only thing it’s good for. When Texas interest rates drop, those with high interest mortgages can refinance and finish paying for their homes at the new rate. Even with closing costs, if the rate is significantly lower, you will come out ahead by working out a new mortgage with a Houston refinance company.

Refinancing can also lower payments for those who have to pay private mortgage insurance (PMI) due to borrowing over 80% of the home’s value. Once you’ve paid the principal down to less than 80% of the value, there is no reason you should have to pay PMI. Catching a nice, low interest rate and refinancing as soon as possible after you reach that point can save you lots of money over the life of your mortgage.

Those with adjustable rate mortgages (ARMs) can particularly benefit from Houston refinancing. ARMs start out with a lower than normal interest rate, but after a specified time frame (usually a few years), the rate may be adjusted according to current interest rates. This can result in your payment going up significantly, possibly even doubling. That’s why most buyers who opt for an ARM either plan to sell or refinance with a fixed rate mortgage within five years.

Pay Attention to Points

One thing to look out for when refinancing is whether or not you’re required to pay points. There are two kinds of points. Origination points are fees charged to pay for the cost of processing the loan. Discount points are prepaid interest that is due upon closing.

When refinancing, it’s important to read the fine print, especially where points are concerned. One point is equal to one percent of the loan amount. So in essence, for each discount point you pay at closing, your interest rate is one percentage point higher. You might think you’re getting a good refinance rate, but if you’re paying several points, it’s likely that you’re not.

Refinancing when rates are low is a great way to save money if you have a mortgage with a high interest rate. As long as your credit is good and you haven’t taken on too much debt, you should have no problem with Houston refinancing.

• houston mortgage refinance | houston home loan | home equity loan
• houston mortgage refinance 101 – if you would like to refinance your houston home mortgage to get a better rate or terms there are several things to consider. You will usually be able to get the best rate if you can document your income and your credit score is above 700.

Related refinancing articles:

• Home Refinancers Save $3 Billion (zillow.com)
• Why Now May Be a Good Time to Consider Refinancing a Mortgage (bucks.blogs.nytimes.com)
• Rates on 30-year mortgages set new record low (sfgate.com)