Waco Rate and Term Refinance

Are you having trouble keeping up with your mortgage payments? Have you wanted to take advantage of rate changes since you got your loan? You might want to consider a rate and term refinance to lower your interest payments or the monthly amount you pay. 

Let’s look at a rate and term refinance, how it works, and how you can refinance your home.

Rate And Term Refinance: The Basics

With a rate and term refinance, you can replace the terms of your existing loan with ones that better suit your financial situation. When you refinance your mortgage, you get a new loan, pay off the old one, and then start making payments on the new one. With a rate and term refinance, you can extend or shorten your loan’s repayment period, reduce the interest rate, or adjust your monthly payment. Lenders often refer to rate and term refinancing as regular refinance.

Requirements for Rate-and-Term Refinancing

Mortgage lenders will require that you meet a set of minimum qualifications when applying for a home loan. When refinancing your mortgage, you will find that more or less the exact requirements apply.

Expect to encounter the following requirements as you try to refinance your mortgage rate and term:

– Credit score: 

Lenders typically require a credit score of at least 620 (580 for FHA or VA loans) and solid credit history.

– Home equity: 

If you want the best interest rates, you should have at least 20% equity in your home by applying for refinancing. However, it is possible to refinance with less home equity if you desire.

– Debt-to-income ratio (DTI): 

The lower your DTI ratio is, the better. Wait until your debt-to-income ratio is at 30 to 50 percent or lower before refinancing your mortgage.

– Closing costs: 

Closing costs are fees paid when a property is purchased and can make up between 2 and 6% of the loan amount. Lenders will require you to pay them at closing, though homeowners willing to accept a higher interest rate may be able to include these costs in the refinanced loan.

Is Rate-and-Term Refinance For You?

Refinancing can be one of the most beneficial financial decisions you ever make. If you intend to stay in your home for a long time, lowering your interest rate by more than half a percentage point can make a significant difference in your budget.

However, lower interest rates must be available to you for rate-and-term refinancing to be effective. Refinancing is good if the market interest rates are at an all-time low or your credit has improved substantially, giving you access to lower interest rates. Furthermore, the costs of refinancing a home typically exceed $5,000, so you’ll need to figure out your break-even point.

Refinance With Capital Home Mortgage Today!

If you think a rate-and-term refinance makes sense financially, Capital Home Mortgage can provide you with refinancing options tailor-made to your needs and budget. We also offer Streamline Refinancing for FHA-insured mortgages. As a direct mortgage lender in Waco, Texas, we have complete control of the mortgage process and can close the loan as scheduled. 

If you need more information about rate-and-term refinancing and what it entails financially, contact us at (254) 213-7343. Our Home Loan Specialists will be more than happy to answer any mortgage-related questions you have.