Texas Home Equity Loan | Investment Refinance | Mortgage Refi Rates | Texas

April 17, 2008

Texas Home Equity Loan  Rates| Investment Refinance Rates| Mortgage Refi Rates | Texas Mortgage Rates 

In Texas you can refinance your home as well as your investment property.  

And with low mortgage rates, lots of people are doing just that.

When it comes to refinancing, you have two options.   A “rate and term” refinance or a home equity loan “cash out” refinance.

With a home equity loan you pull equity out of your home or investment property.

Mortgage Refinance Application (free) or call 512-996-8194

Most people refinance to get a lower rate; this is called a “rate and term” refinance.  One is keeping the same loan amount, they are just lowering or changing the rate or term of the mortgage.

 Maybe they are going from a 30 year note to a 15 year note.   This is a rate and term refi.

  Lower mtg rates do mean lower payments.  But some clients choose a “cash out” refinance (Home Equity loan) which means they pull equity out of their homes or investment properties for other purposes …like paying off debt or buying additional property.  

 Home equity loans have slightly higher rates than traditional rate and term refinances because one is raising the original loan amount.   Plus when one pulls cash out of a home or investment property this is a higher risk loan.  Higher risk = slightly higher rate. 

For many people home equity refinances can be a great way to jump start a new financial plan.  Get out of debt, pay off bills, have more money to save and invest.   My clients have saved hundreds each month by paying off high interest credit cards.   My personal record is saving a family $1000/month using a home equity loan.    Once they save this money they plan to pay extra on their mortgage so they pay a 30 year note in 15 years.   So used correctly, a home equity mortgage is a great way to move forward financially.

 Most of my clients my personal philosophy with mortgage lending.   There are lots of mortgage people out there who promise “the lowest 30 year mortgage rate or the “best Texas 15 year mtg rate”–but this isn’t really my approach.    I tend to favor what is best for the client’s short and long term.  If one needs a 15 year mortgage with low closing costs, let’s use this program.   Need to consolidate debt, let’s use a home equity loan.   

I just don’t believe in one-size fits all mortgage plans.  As soon as my clients all look the same, have the same income/debt, goals, then I’ll become a one-size fits all mortgage guy.  But for now, I work with low income people, millionaires, investors, first time home buyers, second home mortgages, etc.

 One’s mortgage can be either a debt instrument or a better financial tool, it’s really up to you.  And in today’s economy where the realities of $5 gas aren’t really unreasonable you should work with a professional (like me!) who will take the time to listen and bring the right mortgage plan to the table.  

  When you refinance or buy a home one should look at a mortgage plan that will move you forward financially.

Questions you should ask yourself when buying or refinancing.

1) How much debt do I currently have?   How much debt am I currently servicing each month?  

2) How much in liquid savings do I currently have? Could I choose a mortgage that will help (a) lower my bills and (b) help me to save more money each month?

3) How long do I plan to keep this home?

4) What is my long term financial plan, and how does this new mortgage help this plan.

 For example of #4 in action.  Having a long term financial plan.    A good mortgage broker will take the time to learn your goals.   The average mortgage person just wants you to sign papers.  

Example, let’s say you’re self employed and don’t have a company retirement plan-401k-to rely on.   One approach in solving the “no 401K/IRA” problem is to own real estate.  The goal is to own a few choice properties so when you do retire you will have these properties paid off and/or creating income.  Imagine if your mortgage broker took the time to understand your long-term goals and structured the new loan around these goals.     http://www.mylendingplace.com. 

Remember, most mortgages are based on a 15 or 30 year basis, why not structure your first home to help you retire in 30 years.   I know this seems unrealistic because most people don’t keep homes that long, but going into a mortgage with a plan is better than just going into a mortgage.

 Most people don’t want to take the time to think about money–but in the end–the lack of money causes a lot of other challenges in life.  

This is how I’m different from the other Texas Mortgage Loan people.   I believe I can either help people move forward financially or I can just get them into debt.   Sure it’s easier to “sell low rates” but not at the expense of helping a client in the long term.    Did you know that most of my clients having lower closing costs because they pay their own taxes and insurance?    To pay one’s own taxes (to waive escrows) one’s rate is .125% or .25% higher than the typical mortgage.  

But the benefit to you, the client, is lower closing costs.    Most of my clients are willing to pay .25% higher rate to save 3K in closing costs.   So it’s not as thought I recommend higher rates, I just recommend paying higher rates if this gives you a true benefit, like having lower closing costs or avoiding PMI.

Also, my clients avoid PMI when possible.  But to do an 80/15 or 80/10 or an 80/10/10 one’s mortgage rate is slightly higher but the benefit is avoid pointless PMI and having lower closing costs.

Right now I want to touch  briefly on these 3 issues and why one should be thinking of them when you buy or refinance a home.    Actually, your mortgage person should customize your loan around these three points for you.   If they don’t–run.   If all they sell is a mortgage rate did they really serve you? 

Mortgage brokers and banks love to advertise low mortgage rates.   “We have the lowest rates in Texas!”  But let’s think about the loan like this:  “How much did it cost you to get this rate.”  Because low mtg rates are one thing, but how much did it cost to get the rate?    

Let’s look at one of Today’s Mortgage ads.  (April 17)   They are advertising a 4.87% rate.   

 Funny.  The real 30 year rate is around 6% but they know people want “low rates” so they advertise a great rate. But when you look at the points it will take to get this rate, you’ll see there’s more to getting a mortgage than just rate.   Closing costs.

For example, if you’re buying a $200K home should you really “buy the rate down” with points to get a good rate?     To buy this low, low rate, it will cost $6,000 just for discount points.  And yet people do this all the time.  Mortgage people advertise low rate because people want low rates.     

Sorta reminds me of when I bought my Toyota Tundra.   I wanted to save a nickel so I went for the 2×4 instead of the 4×4 all-wheel drive.   I was so proud of getting the “lowest price in town” but when it snowed or iced I had to ask my wife to drive her front-wheeled drive Honda Accord. 

This is one reason why I suggest working with a mortgage broker (like me) who approaches mortgage lending from a total financial planning perspective.    Because if I notice a client has a ton of credit cards and misc. debt–this 6K should not go towards a new (tax deductible) debt but towards paying off old, high interest debt that’s not tax-deductible.

 Or to use real numbers, if you have the $6000 to pay towards debt, retire 15% interest debt that’s costing you $500/month instead of trying to save $200 on your mortgage.   Then pay $100 extra and you’re still saving $300.   Use this $300 for savings, investing or having fun.

But what about all the interest I’ll save by having a low rate?  Shouldn’t I try to get the best rate so I can have lower monthly bils?   Yes.   Once you’re out of consumer debt–and you no longer have to pay $500 out, begin to apply $100-$200 extra on your mortgage payment.    This will take years off your mortgage, usually taking a 30 year mortgage to a 12-15 year.  This will save you tons in interest and give you lower payments.

When you buy or refinance any property take the time to look at the bigger picture because a mortgage or refinance can either help move you forward financially or just get you into debt.

 https://mylendingplace.securesites.net/application/

512-996-8194

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