Dallas Rate and Term Refinance

A friend or relative says it’s wise to refinance your mortgage after building enough equity in your home. Refinancing is a wise decision if you want to get a better mortgage term. Some borrowers get expensive mortgages because of credit history, additional mortgage insurance, or low credit scores. But after paying consistently and avoiding late payments, they gradually build a good credit score and history.

Rate and term refinancing is one of the products you can get today, especially if you’re in the mortgage market to get a better term. Capital Home Mortgage offers rate and term refinancing to existing mortgagors. Reach out to our mortgage specialists to discover your refinancing options. If unsure, here’s a primer for rate and term refinancing.

What is a Rate & Term Refinance

Rate and term refinancing is an agreement wherein the borrower applies for a new mortgage to replace the existing one. As the name suggests, this refinancing program gives the borrower a lower rate and a better term. You can either extend the loan term or reduce it. Extending the loan term is better if you need more flexibility in monthly mortgage payments. On the contrary, reducing the loan term is better if you want to pay your mortgage faster.

Rate and Term Refinance Basics

In a rate and term refinance, you simply replace the existing mortgage with a newer mortgage agreement. The new deal will have a lower interest rate and a better loan term. For example, let’s say you have a $600,000 mortgage loan with an outstanding balance of $432,660. By choosing a rate and term refinance, you’ll get a new mortgage loan for $432,660 but negotiate a lower interest rate and a different loan term.

So if the current interest rate is six percent per annum, you can negotiate with the lender to give you a rate lower than six percent. Moreover, you can ask the lender to provide you with interest rate options based on the maturity date. 

Requirements of Rate and Term Refinance

Rate and term refinancing can vary depending on the product. In conventional refinancing, you’ll be subject to the requirements of conventional loans. Your credit score must be at 620 and a minimum payment of 20 percent to skip mortgage insurance. Alternative refinancing is government-backed programs like FHA and VA.

FHA refinancing can be more liberal because lenders can accept borrowers with credit scores as low as 500. However, the ideal credit score is 580. For VA refinancing, VA borrowers enjoy zero down payment and flexible credit score requirements. To know which product to choose, speak with Dallas mortgage specialists to walk you through the different mortgage products for rate and term refinancing.

Apply for a Rate and Term Refinance Today

At Capital Home Mortgage, we strive to deliver a streamlined loan process. We’ll help with your rate and term refinance application from start to finish. Call (214) 372-0015 and refinance your mortgage in Dallas with us today.