Loan Program
There are only three honest reasons to refinance: to lower what you pay, to get rid of mortgage insurance, or to take equity out. If a lender is pitching you a refinance and it does not clearly do one of those, ask what it does for them.
Divide the total cost of the refinance by the monthly saving. That is how many months you must stay in the loan before it has paid for itself. If you are likely to sell or refinance again before then, it is not worth doing — regardless of how much lower the rate looks.
If you bought with FHA and now have twenty percent equity and a decent credit score, refinancing into a conventional loan removes mortgage insurance permanently. That alone can justify a refinance even when the rate barely improves — and it is the single most-missed opportunity we see.
Cash-out refinancing usually caps at eighty percent of value and prices slightly above a rate-and-term refinance. In Texas it is stricter still, with constitutional limits on fees and a mandatory waiting period. If the amount you need is modest and your current rate is low, a second mortgage is often the better tool.
Refinancing restarts the clock. Trading twenty-two years remaining for a fresh thirty-year term can lower the payment while costing more in total interest — sometimes a great deal more. If the goal is cash flow that may be exactly right; if the goal is paying the house off, it may be exactly wrong. We will show you both figures rather than only the one that makes the refinance look good.
There is no fixed rule, despite what you may have heard. Divide the cost by the monthly saving to get your break-even in months, then ask whether you will still own the home that long.
Yes. Refinancing an FHA loan into a conventional one removes mortgage insurance permanently once you have around twenty percent equity, and it is frequently worth doing on its own.
Most programmes cap the new loan at eighty percent of value, so you need equity beyond that. VA allows more.
Tyler McCain is based in Lebanon, TN and works across the Nashville metro.
Tyler McCain is licensed in Alabama, Florida, Kentucky, Ohio, Tennessee and Texas. Programme rules are federal, but the markets are not.
Tap equity without touching the first-mortgage rate you already have.
Read more →As little as 3% down, with mortgage insurance that comes off.
Read more →3.5% down with flexible credit — the workhorse first-home loan.
Read more →Zero down, no monthly mortgage insurance, earned through service.
Read more →That depends on numbers we have not seen yet. Two minutes, no credit pull, and Tyler will tell you straight — including if the answer is a different programme entirely.
