Whether you’re looking to save money by taking advantage of lower market interest rates or need cash for home improvements, it may be time to consider refinancing your mortgage.

The McDaniel Mortgage Group offers refinancing options across a variety of loan programs throughout Texas and many other states, including conventional loans, VA loans, FHA loans, and more. No matter what your refinancing goals are, our team can help you find the right solution to meet your needs.

Rate-and-Term Refinance

As the name suggests, rate-and-term refinancing is designed to help you lower your current interest rate and/or adjust the term of your mortgage. Many homeowners refinance into shorter terms to pay off their loans faster and save money in the long run. Rate-and-term refinancing is often referred to as a “no cash-out” refinance because no money is disbursed to you upon signing your new mortgage. Additionally, this type of refinance does not increase the value of your loan. If market rates are favorable, many homeowners can benefit from this option.

Rate-and-term refinancing is particularly popular among homeowners with an adjustable-rate mortgage (ARM). While ARMs can be advantageous early on with low initial rates, they carry the risk of significant rate increases over time. Refinancing into a fixed-rate mortgage offers stability and ensures that your interest rate remains consistent for the life of the loan, resulting in greater predictability and potential savings.

Another ideal candidate for rate-and-term refinancing is a borrower who initially obtained a mortgage with less-than-perfect credit or could not qualify for a competitive interest rate. If your financial situation and credit score have improved, you may be eligible for a better rate, even if market conditions haven’t changed significantly.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a new one that has a higher loan amount. The difference between the two amounts is given to you as cash. Your new mortgage balance will equal your existing home loan plus the value of the cash payout.

Cash-out refinancing can be an excellent way to pay off high-interest debt, fund home improvements, and more. However, it’s important to use the cash responsibly. For example, using the funds for extravagant vacations or unnecessary purchases is generally discouraged. Instead, consider investing the money into projects or opportunities that can benefit you financially.

Not everyone qualifies for a cash-out refinance. To be eligible, you need sufficient home equity, a solid credit score, and a low debt-to-income ratio.

HELOC (Home Equity Line of Credit)

A Home Equity Line of Credit (HELOC) allows borrowers to access funds directly from their home’s equity. Borrowers can typically access up to 80% of the home’s loan-to-value (LTV) for primary residences and up to 75% for investment properties.

Advantages of a HELOC:

• Lowering the interest paid on high-interest credit cards

• Funding home improvements

• Providing a down payment for a new home or investment property

• Offering a credit line secured by your home’s equity

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See What Your Options Are

Even if you’re just curious about your refinancing options, it never hurts to consult a professional. The McDaniel Mortgage Group is here to answer any questions you have about refinancing your mortgage—whether it’s for now or in the future. Contact us today to see if a refinance or HELOC is right for you!