Refinancing Basics

Refinancing is simply trading one mortgage for a new mortgage. In order to refinance your home, you will have to submit an application to a lender. The lender will have the home appraised and review your credit. In addition, a title report may be requested to see if there are any additional liens. After the background investigation, the lender will decide if they are willing to refinance the home.

The proceeds of the new loan will be put towards the first mortgage as well as any additional mortgages. Therefore, the only mortgage on the home after the refinancing will be the new loan.

When interest rates fall below the rate at which the homeowner first financed his or her home, homeowners might want to consider refinancing. Whether it’s beneficial or not depends upon how large the mortgage is and the percentage difference in interest rates. Therefore, if a loan totaled $100,000 and was taken out at an interest rate of 8% when interest rates fell below 6%, it would probably be smart to refinance.

It does cost money to refinance, so please keep that in mind when calculating your savings. Expenses include points, tax service fees, documentation preparation fees, title expenses, appraisal fees, etc. For each point, a homeowner is charged a thousand dollars. Even with these expenses in mind, refinancing can be an extremely wise financial move for many homeowners.

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In this tough economy, refinancing your home could be a great way to help you and your family save money. To learn more about refinancing and see if it would make sense for your individual circumstances, contact Texas Mortgage Loans today.