Abilene Rate-and-Term Refinance

If you’ve had your mortgage for a while, chances are your situation has changed since you first got it, and newer and better options may be available. You can refinance your mortgage for a new rate and term or find a new loan that works for you now.

What is a Rate-and-Term Refinance?

A rate-and-term refinance allows homeowners to change their mortgage loans’ terms and interest rates. This specific type of refinancing effectively enables you to replace your existing loan with a new mortgage with better interest rates and financing terms.

The idea behind a rate-and-term refinance is pretty straightforward to understand. You get a new loan, use it to pay off the remaining balance on your old mortgage, and then start making payments on the new loan.

How much does rate-and-term refinancing cost?

Refinancing costs money, but it can be financially beneficial depending on the circumstances. In addition to the origination fee, there will be fees for the home appraisal and the loan recording. Typically, you’ll pay between 2% and 5% of the total loan amount in closing costs.

There are refinance lenders who advertise loans with no closing costs. This indicates that you will not be required to pay the closing costs upfront. Instead, the closing costs will be incorporated into the new loan amount and amortized over the loan’s term.

What factors affect the cost of mortgage refinancing?

When you apply for a mortgage refinance, the lending institution will provide you with a Loan Estimate that details the loan’s closing costs, interest rate, and monthly payment, among other things. 

Aside from the interest rate, the total cost of your borrowing is affected by several variables, including:

• Size of the loan

A larger loan balance will typically result in a higher monthly mortgage payment and closing costs.

• Location

Depending on where you live, the amount you pay at closing can be very different when you refinance. Property taxes, appraisal fees, and other costs of buying or selling a home vary significantly from one part of the United States.

• Discount points

Lenders often offer the option of paying a fee for a reduced interest rate on loans. Each “point” adds one percentage point to the total cost of the mortgage.

• Type of Refinancing

Rate-and-term refinances typically have lower interest rates than cash-out refinances.

• Fees

Closing costs may include fees such as an application fee, appraisal fee, and title fee, but some lenders may waive or lower these fees.

Mortgage refinancing is an option you may want to explore if you’re having trouble making your monthly payments or if interest rates have dropped significantly since you first secured your loan. By refinancing to a shorter term, you’ll save more money on interest and pay off your loan faster.

Do You Think Rate-and-Term Refinance is For You?

Capital Home Mortgage offers flexible refinancing solutions to meet Abilene homeowners’ specific requirements and financial goals. If you decide that a rate and term refinance makes economic sense, speak to one of our mortgage specialists today to know your options. Those with an FHA-insured mortgage can take advantage of the FHA Streamline Refinancing program. 

Capital Home Mortgage is a direct Texas mortgage lender, which means we have complete authority over the mortgage process. We can offer you the most attractive rates and terms and expedite the process if necessary. 

Contact us at (325) 387-8387 for more information about rate-and-term refinancing and other mortgage products. Ask away! Our in-house loan experts are here to answer all of your mortgage-related questions.