Best Reasons to Refinance a Mortgage in Houston, TX

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Why does anyone refinance? What are the main reasons to look out for? Let’s go over the article!

 

When does refinancing make sense? What is the main purpose of refinancing? When these questions circle around your mind, you need to take a step back and think. Go over your reasons and then decide whether you are making the right decision.

For a first-time homebuyer, the mortgage application process itself was terrifying. So, this article presents a few important reasons for which many borrowers choose to refinance Houston, TX. Let’s have a look!

For Finding a Lower Rate

Refinancing in Houston, TX makes sense at particular times. For instance, when the market rate plummets, you can refinance for a better rate. Lowering your monthly payment is your ultimate goal because this is the way to reduce interest payments. Lowering monthly payments for a small principal amount can also help you save higher over the years.

During the pre-pandemic era, the market noticed a spike in refinance rate. 55% of homebuyers opted for refinancing while keeping the present principal amount or boosting the balance. For rate-and-term refinance, this is not uncommon. Higher credit scores can lead you to better interest rates.

You can also get a lower interest rate if you bring cash to closing. This helps in avoiding mortgage insurance premiums, too.

For Getting into a Shorter Term

You can see a change in the monthly payment if you pick a 15-year mortgage or 30-year mortgage. The interest rate on a 15-year loan is lower as it sheds years off from your mortgage. This means you will pay less on the interest rate with time. Interest savings can work just fine when you are not considering interest deduction on the tax return.

Loan rates going so low is another perfect reason to get into refinancing. Many borrowers spend a significant amount of time paying off the loan. This is done to invest more cash at a higher rate. In this context, it is important to know that 78% of borrowers refinance from a 30-year fixed-rate home loan. Only 14% of borrowers went from a 30-year fixed-rate loan to a 15-year program.

Many borrowers choose to refinance Houston, TX in order to do away with private mortgage insurance premiums of FHA loans. But there are pros and cons of the mortgage refinance. You might have less cash to go for investment or find the new terms less flexible. Talk to a professional lender and consider these points before making a final decision.

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