When Refinancing Your Magnolia TX Home Makes Sense

Watching mortgage rates change over the past few weeks has many Magnolia TX homeowners feeing the need to refinance. After all, if rates continue to rise— shouldn’t you lock in a lower rate while you still can? Not necessarily! Refinancing may indeed save you some money on your monthly payment, but that doesn’t always mean it’s the best option for you, or at least not at this time.

So how do you know when refinancing your Magnolia or Tomball TX home makes sense? Below are a few factors to note before you make your decision to lock in a lower rate on your mortgage:

Refinancing is not free
Unfortunately, there is no such thing as a free refinance. Homeowners will still be required to pay closing costs which can average between 2 and 5 percent of your total loan amount. You may find that your lender offers a refinancing product with no closing costs, but it will typically come packaged with a higher interest rate, so be sure to do your due diligence before signing on the dotted line!

Costs should repay themselves quickly
While you may be required to pay closing costs upfront with a refinance just as you did with the home purchase, these costs should repay themselves quickly. Refinancing will make the most sense when your interest rate is more than 100 points above the current rates. For instance, if your 30-year mortgage has an interest rate of 4.8 and the current rate is 4.1, now may be a great time to refinance!

Why? Your costs would repay themselves in just over a year. Keep in mind that refinancing costs should repay themselves in two years or less in order for this move to be a wise decision.

You will reset the life of your loan
For long-time homeowners in Magnolia and Tomball, you may have reached that point in your mortgage where your payment is going to repaying the loan itself rather than interest. If that is the case, know that refinancing will essentially reset your home loan and your payment may again begin going toward interest rather than the loan.

You could cancel PMI
Homeowners who purchased their Texas home with less than 20 percent down are typically required to take on private mortgage insurance or PMI. Refinancing your home may allow you to cancel your PMI if you have gained a significant amount of equity in your home over the past years.

Refinancing your Magnolia home could save you on your monthly payment, but it is always wise to do your research ahead! Ready to find your Magnolia TX home value or discuss next steps for listing your property in the area? I’m here to help!

Give me a call today!

Pam Sitterly
Phone: (281) 723-0324
Email: [email protected]

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