Buying/Improving a Home, Managing Your Finances

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are several reasons you may consider refinancing your mortgage. The most common reasons include the opportunity to obtain a lower interest rate; the chance to shorten the term of the mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage; and the desire to consolidate debt. However, the number one reason most consult with Texas Gulf Bank on this subject is to lower monthly payments.

If you are seriously considering refinancing your home, here are a few steps to help you prepare:

Determine your goal for refinancing.  Maybe you are willing to accept a higher monthly payment if it shortens the amount of time to pay off your mortgage. Or, perhaps a lower monthly payment is your goal and you are willing to accept a longer loan period to achieve it.  Knowing your goal from the beginning will help you easily determine if the decision you are making aligns with your desired outcome.

Know your all-in costs. Texas Gulf Bank’s mortgage refinance calculator can give you a good idea of what to expect. How long will it take to break even on a mortgage refinance? That depends on a multitude of factors including your current interest rate, the new potential rate, closing costs and how long you plan to stay in your home. Once you input the data, the tool will calculate your monthly savings, new payment, lifetime savings and the number of months until you break even, based on the costs of your refinance. This calculator can help you sort through the confusion and determine if refinancing your mortgage is a sound financial decision.

Gather paperwork.  A refinanced mortgage is generally reserved for well-qualified borrowers—those homeowners with sufficient income, good credit and typically at least 20 percent equity in their homes. As such, borrowers must prove their mortgage worthiness by submitting the designated documents to the prospective lender. Rather than going back and forth with your lender, it is smart to gather the necessary paperwork ahead of time. A few examples of what you will need include proof of income – pay stubs, tax returns, W-2’s and/or 1099’s, statement of outstanding debt, and statement of assets.

Once you’ve set your goals, gathered all of the necessary documents and decided whether a mortgage refinancing makes sense for you, it’s time to move forward with the application process. Texas Gulf Bank can help you select a refinancing option that’s right for you. Contact us today at 1-800-467-7216 to start on a successful path to refinancing.