Your Refinancing Questions
In September – October 2015, we asked users of several forums on TexAgs.com to submit their mortgage-related questions. The questions were great, so we thought we’d share a summarized list of the questions (and their answers) on our website. We’ve grouped them into three major categories:
Have questions that aren’t answered here? Send them to us at firstname.lastname@example.org and we’ll get you an answer asap!
When does it make sense to refinance?
Whether you should refinance comes down to how much you’ll save per month, and over what period of time, vs. how much it will cost you to refi. There are some easy-to-use calculators that can help with that math:
How does a ‘cash out’ mortgage differ from a regular refi?
In Texas, you can refinance at current rates (cash out rates are a hair higher than regular refi rates) and borrow against the equity you’ve built up in your home. You do have to leave at least 20% of your equity in the home, but other than that, you can take out accrued equity in any amount. The cash can be used for any purpose: debt consolidation, household improvements, etc. You can take cash out with conventional, jumbo, or investment property loans. The whole transaction can be completed without any out of pocket costs.
You can do a cash out mortgage no more than once per year.
What are the advantages of a cash out refi vs a HELOC?
In either case, you will need to keep 20% equity in your home and you cannot do either more than once a year. Typically, a HELOC has very low closing costs, but is an adjustable rate loan. With a cash-out refi, you will get a new 15- or 30- year fixed rate mortgage at today’s low interest rates. Many of our clients benefit from refinancing aside from the cash out aspect of the loan. Either a HELOC or a cash out loan can be accomplished with no cash out of pocket. In short, the decision between a HELOC and a cash out loan is typically based on:
- The amount of money you need to take out
- The length of time before you can repay
- The current interest rate on your home
A HELOC is a logical choice for addressing a short-term cash crunch, while a cash out loan is great for lowering your overall interest rate while taking out a substantial amount of cash (such as for a major remodel) that you prefer to pay back over an extended time.
See the Q&A on: