It’s Going To Going to Get Hot in the Houston Refinance Market
Over the past 25-30 years, Houston interest rates have risen and fallen wildly in a financial tide of home loan offerings. In the early 1980’s for example, mortgage rates for traditional 30 yr., fixed rate mortgages were in the neighborhood 18%. Today, though, we are seeing interest rates for the same type of mortgage loan in the area of 5% – and even as low as, in the 4% range.
A lot of Houston home owners who purchased their homes when rates were sky high are now thinking about a Houston refinance so as to reap the benefit of today’s lower mortgage rate. If you are among these people, know that there are some costs involved in refinancing your mortgage, such as a home appraisal, title insurance, and a loan origination fee, just to name several. To figure if these costs will off set with the potential cash you can save by refinancing, you can use the basic rule of thumb called the 2% rule.
In basic English, this rule recommends that the percentage difference between your current rate on your loan and the new interest rate being suggested should be at least 2 points. That suggests that if you were among those those who borrowed in the 80s who boughta mortgage with a rate in the double-digits (and today you can get a rate around 5%), it would make a ton of sense to refinance.
What you see below are 3 advantages why people are refinancing in Houston to a lower rate:
1) Lowering monthly payments – By reducing the interest rate of your loan, you will see a significant difference in your mortgage payment every month. And, every small bit helps. Some borrowers who refinance have saved $1,000’s of dollars over the lifeof their loan period. How much you will personally save, though, completely relies on your specific numbers. So, be certain to speak to a mortgage specialist who is qualified to do the number crunching for you to figure out how much you might be able to save with a refinancing.
2) Altering the type of loan you hold – Some borrowers decide to refinance in Houston even though they won’t save much cash by doing so. Consider of the many people who got an adjustable rate mortgage. seeing many of these people refinancing just to change to the fixed rate mortgage. At the same time, some people who have a balloon worked into their mortgage are deciding to refinance as it gets closer to the date to make that big payment.
3) Pulling cash from your equity – If you’ve been in your home for 10 or more years, there’s a better than average chance you have a sizeable bit of equity because of the overall Houston home appreciation (even with the current dip in home values) and to the fact that you’ve made those monthly payments for quite some time. Because of this, some folks decide to withdraw value out when they refinance their home mortgage loan so as to aid with such things as retirement or with their kids’ costs for college.
If you are contemplating refinancing your Houston mortgage, be certain to talk with a qualified Houston home loan professional – someone experienced in refinancing who can sit with you and go over your situation and your numbers and the the various options available to you. And know, that each situation is unique. Your mortgage professional should ask about short term and long-term benefits (or consequences) that are unique to your situation and adjusted towards your financial future.
