Refinancing your Texas or Arkansas home
A refinance replaces your current mortgage with a new one. Done for the right reason, it can lower your payment, shorten your term, drop mortgage insurance, or turn equity into cash. Done for the wrong reason, it just resets the clock. I will tell you which one yours is.
Reasons people refinance
Most refinances fall into one of these:
- Lower the rate or the payment when the market has moved since you bought
- Shorten a 30-year loan to a 15- or 20-year term to pay it off sooner
- Drop FHA mortgage insurance by moving to a conventional loan once you have enough equity
- Take cash out for a remodel, debt consolidation, or another purpose
- Remove a co-borrower after a divorce or buy out a family member
- Move from an adjustable rate to a fixed one
Rate-and-term versus cash-out
A rate-and-term refinance changes the rate, the term, or both, and the new loan pays off the old one without putting money in your pocket. A cash-out refinance borrows more than you owe and gives you the difference at closing.
Texas has its own rules for cash-out refinances on a homestead, written into the state constitution. They limit how much of your equity you can borrow, cap certain fees, and require waiting periods and specific disclosures. Arkansas does not have those particular restrictions. If you own on the Texas side, I will walk you through what applies before we start.
Streamline refinances
If you already have an FHA, VA, or USDA loan, you may qualify for a streamline refinance. The FHA Streamline, the VA Interest Rate Reduction Refinance Loan, and the USDA Streamlined-Assist refinance all use less paperwork than a regular refinance, often skip the appraisal, and require that the new loan give you a clear benefit, usually a lower payment. They are the quickest refinances I do.
What to bring
A refinance is a full loan application, so the paperwork looks a lot like a purchase:
- Your current mortgage statement
- Recent pay stubs and two years of W-2s or tax returns
- Two months of bank statements
- Your homeowner's insurance declaration page
- A photo ID and permission to pull credit
Is it worth it?
Every refinance has closing costs, whether you pay them at the table or roll them into the loan. The math I run for you is simple: how much the new loan saves you each month, divided into what it costs to get it, tells you how many months you need to stay to come out ahead. If you plan to move before then, we do not refinance. I would rather lose a loan than put you in one that does not help you.
I also look at how far into your current loan you are. Restarting a 30-year term after ten years of payments can cost you more in the long run even if the monthly payment drops, so we look at total interest, not just the payment.
All loans are subject to credit approval, and program terms vary by lender.
Questions
The questions people ask first
How much equity do I need to refinance?
It depends on the program. Streamline refinances often do not need an appraisal at all. A conventional rate-and-term can work with fairly little equity, and cash-out refinances require more, with Texas setting a hard cap on homesteads. I will tell you where you stand from your current balance and a rough value.
Can I refinance if my credit has dropped since I bought?
Often yes. Streamline programs look less at credit than a new purchase does, and lenders set their own minimums. Send me the details and I will check what fits.
Will refinancing reset my loan to 30 years?
Only if we choose a 30-year term. You can pick a shorter term, or in some cases match the years you have left. We look at total cost, not just the monthly payment.
Ask Rosalyn
Not ready to apply? Tell me where you are and I'll call you back.
Your note is in. I'll call you back, usually the same business day. Need us sooner? Call (903) 309-3826.