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  • Houston refinance mortgage rates: Is it time for you to consider a change?


    Refinancing in Houston is a viable option for many homeowners. Low mortgage refinance rates in Houston are helping homeowners lower their monthly payment and interest rates. Read on to see the current forecast for Houston’s refinance rates and housing market, and how they might affect you.


    Housing market in Houston

    The housing market in Houston hit one of its lowest points in 2012 when the median home value was $96,000. Houston homes have regained their value over the past five year – the 2017 estimate is $145,000. Unfortunately, Zillow predicts median home value in Houston will decline again, starting as soon as early 2018.


    The decline of housing prices coincides with the prediction, from two real estate associations, that interest rates will rise. The Mortgage Bankers Association and The National Association of Realtors predict rates to average 4.7 percent and 4.6 percent, respectively, by the end of 2017. Predictions into 2018 have not be released.


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    These predictions mean, if you’re considering refinancing, you should act soon, especially if you plan to get an appraisal before refinancing. Getting an appraisal when your home is worth more will improve your loan to value ratio.


    Loan to value ratio is calculated by the total mortgage amount divided by the appraised value of the property. This calculation serves as a risk assessment for lenders before approving a refinance mortgage. The higher the loan to value ratio, the greater a risk the borrower is, and in turn, the worse loan terms a borrower will receive.


    Conforming loan limits in all of Texas are $424,100. FHA loan limits in the largest county in Houston, Harris County, is $331,200.



    Which refinancing product should you select?

    Houston lenders offer loan terms of varying lengths. The most popular loan terms, for fixed-rate loans, are 10, 15, 20, and 30-year terms.


    Refinancing to 30-year loan terms in Houston will allow you to stretch your payback schedule over a longer term, and as a result, reduce your monthly payments. Refinancing into a shorter loan, like a 15 or 20-year, will lessen the time of your loan, but will likely increase your monthly payments.


    Use a mortgage calculator to determine how interest over the life of your loan will vary from 10, 15, 20 and 30-year terms. Do higher monthly payments save you more money in the long run?


    Another refinancing option is adjustable rate mortgages (ARM). Often, homeowners want to refinance to lower their mortgage rates, which is why many borrowers are attracted to ARMs. ARMs are loans that feature a short period of fixed interest. Usually, 3 or 5 year periods. After the initial period of fixed interest, the rate will increase or decrease with market value. ARM loans allow the borrower to take advantage of low mortgage rates, immediately. But the market volatility after the fixed term can be dangerous for borrowers.  


    The product is meant for short-term stability, only. If you’re nearing the end of your loan, or foresee an increase in income to your household, it would make sense to consider this type of refinance program.


    Another option for borrower is an FHA refinance loan. These loans are designed to help Houston borrowers with credit problems and those who owe more on their homes than they are worth. Lenders can use FHA programs to forgive a percentage of the loan principal in order to refinance a long term loan for a borrower.


    How to select a lender?

    Borrowers in Houston who are comparing refinance loans offered by several different companies are wise to ask several lenders for refinance quotes.


    Borrowers can research the rates at regional banks available in Texas, like Wells Fargo home mortgages, or PNC mortgages. Each of these institutions offers unique perks to their customers. Wells Fargo, for instance, allows current customers to streamline the refi process, which could eliminate some of the paperwork required.


    PNC, on the other hand, takes into consideration non-traditional credit factors like historic rent payments before offering a rate. A lender that looks at a comprehensive credit profile may have more relaxed qualifying terms.


    Credit unions in Houston are another terrific source for research. Credit unions often benefit from community participation, which often means they are offer lower rates and better terms to their customers.  Houston Federal Credit Union, and First Service Credit Union are a couple of credit unions that service the Houston area.


    If you are unable to devote the time to proper research for your refinance, you can also consider a mortgage broker. Brokers will take a small finder’s fee for their work, but because they have connections with many lending companies, they can easily help find the perfect product for your financial situation. They are a great resource for explaining the differences is products you’ll encounter during your hunt for a lender, too.


    Some programs offer no closing costs. To achieve a no cost close, lenders will often pay discount points in addition to loan origination, application, appraisal, title search and other fees on your behalf.


    Are you switching from an FHA loan to a conventional loan? You may qualify to rid yourself of private mortgage insurance, which can offer additional flexibility to your budget.


    Use a Texas mortgage calculator

    If you’re curious to see what refinancing can do for your monthly mortgage obligations, you can start with a mortgage calculator. This tool allows you to compare your current interest rate, payment, and loan amount to any changes you might be eligible for with a refinance.


    See what happens if you shorten your loan by 5 years. How much will your interest raise if you lengthen your loan by 10 years? A handful of calculations will give you a great idea of what product will benefit you the most during a refinance.


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