Refinance Your Mortgage in Texas

Refinancing your existing mortgage is similar to applying for your first home loan. Most of the qualifications are the same for both processes. The borrower will need to gather all the financial documentation required for the application, submit it, and then wait for approval from the lender before they go through the underwriting process. 

What sets the refinancing process apart from the conventional mortgage is that the lender generally requires a better borrowing profile. This profile might include having a higher credit score and higher closing costs.

Here’s how the refinancing process works for homeowners in Texas: 

• Choose a Refinancing Option

  Before you can get the ball rolling, you’ll need to choose which type of refinancing option is the best for you. You might want to look at cash-out refinance or rate-and-term refinance. Cash-out refinance allows you to use your home’s equity for a one-time payment. Rate-and-term refinancing is great for changing your interest rate and, potentially, your loan term. 

• Compare Lenders

  Once you know what type of refinancing you want to pursue, you’ll want to compare lenders. Not all lenders will offer you the exact terms, so it’s best to look into a few and see which one gives you the best mortgage rate for your situation. Check for the requirements, like a credit history, mortgage insurance, etc. 

• Submit Your Application

  Gather all the financial documentation the lender requires to apply for the refinancing option of your choice. You’ll need proof of income, account statements, pay stubs, a credit report, a debt-to-income ratio, and any other specific things they require. Once your application is approved, you’ll use a rate lock or floating rate to secure the approved rate. 

• Appraisal and Underwriting

  The loan officer will begin the underwriting process once approved. This process includes having your home appraised for its current market value and then writing out all the terms of your new mortgage loan. The appraisal is key to determining whether you’ll need to pay for PMI. 

• Close on Your Refinance Loan

  Once the underwriting is complete, you’ll review the loan documentation and officially sign all the required documentation to lock in your refinancing. This point is when you pay any closing costs associated with refinancing. Some lenders might offer discount points to help lower your interest rate even more. 

• Home Inspection

  You’ll need to have your home inspected to ensure it doesn’t have any structural or other issues that cannot be easily fixed. 

Refinancing your mortgage loan is more affordable than applying for a new loan. However, that doesn’t mean it’s completely free. You won’t have to make a down payment, but you’ll need to handle closing costs. On average, most Texas residents pay $4,548 in closing costs.