Reader’s Question:

A friend of mine mentioned about refinancing my home in Dallas. As a long time homeowner I can’t remember the details of my current loan, including the exact interest rate. I actually don’t have a broader idea about it. When do you think should I refinance?

Amanda

Dallas, TX

First, we need to know what refinancing means. To “redo” or to “re “finance is to basically redoing your original financing. It also means extending the existing loans or replacing existing funds with alternative borrowings, which may be at different interest rates. It can either be for longer or shorter terms.

There are various reasons one would refinance. One is possibly to switch from an adjustable to a fixed mortgage, to lower you interest rate, to obtain money from the equity in your property, or to consolidate debt through cash out, etc. However, you need to do your homework first before deciding to refinance. An important factor is the difference between current interest rates and the rate of your original loan. You also need to assess the amount of time it will take to recover the costs of refinancing.
These are the common reasons when to refinance:

• To lower monthly mortgage payments
• To convert an adjustable rate mortgage to a fixed-rate mortgage
• To raise funds for family expenses
• To pay off high-interest loans
• For home improvements

Just bear in mind that you should refinance your home in Dallas Texas if interest rates fall more than 2 points below your existing mortgage rate. This is because refinancing usually involves mostly of the same closing costs as the original loan. If it’s less than 2 percent, the savings on your monthly mortgage payment is rather insignificant. When a drop in interest rates is sufficient to repay the costs of a refinance in a reasonable period of time, then you should refinance. It’s a good thing that there interactive calculators in the Internet to help you come up with a decision.

Tags: home refinance texas, home refinance texas rates, real estate texas, texas home refinance laws