Lower the rate
The classic. Whether it's worth it depends on the closing costs and how long you'll keep the loan. I'll show you the break-even, not just the new number.
Rate-and-term refinance in Texas: fix the loan, not the cash.
A rate-and-term refinance replaces the loan you have with a better one. Different rate, different term, no more mortgage insurance, or one name on the loan instead of two. No cash out. Here's when it makes sense, the Texas rules, and what to send me. I'm in Fort Worth, and most of my clients are around DFW.
Apply Now (opens in new tab)Tell me the deal
I always start with a soft pull, so no hard credit ding.
What counts as rate-and-term
The new loan pays off what you owe now, plus the reasonable costs to refinance. You walk away with a different loan, not a check. In Texas that line matters. On your homestead, the Texas Constitution only lets a refinance add money for the reasonable costs of the refinance, or for a few narrow purposes like paying property taxes or work on the home. Required escrow reserves for taxes and insurance can count as costs. If any cash beyond that comes to you, the loan becomes a Texas home equity loan under Section 50(a)(6), with the 80% cap, the 12-day wait, and the rest. That's covered in my Texas cash-out refinance guide.
Reasons people do it
Change the term
Shorten it to pay the house off sooner, or lengthen it to give your budget room. Pick it on purpose.
Drop PMI
On a conventional loan, federal law lets you ask to cancel PMI once you've paid down enough, and it generally comes off on its own later. The CFPB explains the rules. If your home has gone up in value, a refinance can get you there sooner, because the new loan is measured against today's value.
FHA to conventional
On FHA loans with case numbers from June 2013 on, the annual mortgage insurance premium lasts for years, and on many of them for the life of the loan (HUD Mortgagee Letter 2013-04). Moving to a conventional loan once you have the equity and credit for it is the usual way out.
Adjustable to fixed
ARM's fixed period ending, or tired of wondering? A refinance can lock in a fixed rate.
Take someone off the loan
A divorce, a parent who co-signed. The lender can't just delete a name, so you refinance into your name and qualify on your own. The deed is a separate step.
One Texas note on divorce. If the house was awarded to you and you're paying your ex for their share, Texas allows that as an owelty of partition, a separate kind of lien in the Constitution. Your decree and the title company drive how it's done. Send me the decree early.
Already have a VA or FHA loan?
There may be a faster route. VA has its own streamlined refinance, the IRRRL, covered in the VA refinance section. FHA has a streamline refinance too, in the FHA refinance section. I'll price the streamline against conventional.
Getting out of a Texas home equity loan
If you did a Texas cash-out refinance or a Texas HELOC, your loan is a 50(a)(6) home equity loan. Generally, any refinance of it has to be a home equity loan too, with all the same rules. Section 50(f)(2) is the way back to a regular rate-and-term loan. All four of these have to be true:
- A year has passed The refinance can't close before the first anniversary of the home equity loan's closing.
- No new cash The new loan only pays off existing debt on the home, plus actual costs and reserves the lender requires. Money you bring to closing yourself doesn't count against you.
- At or under 80% The new loan, plus anything else owed against the home, can't be more than 80% of its fair market value on the day it closes.
- A written notice The lender gives you a specific notice on a separate page within three business days of your application, and at least 12 days before closing.
Once those are met, the new loan is treated as a regular refinance lien under Section 50(a)(4), and you sign an affidavit saying the requirements were met. Read that notice. A regular loan loses two home equity protections: foreclosure only by court order, and no personal liability. It's often still worth it. I'll walk you through it.
Rate-and-term, cash-out, or HELOC?
If you need money out of the house, rate-and-term isn't the tool. A Texas cash-out refinance replaces your loan with a bigger one. A Texas HELOC leaves your first loan alone and gives you a line to draw on. Both follow the Texas home equity rules. If the loan itself is the problem, start here.
On a rental, none of the homestead rules apply. Investment property refinances follow lender and program rules, and DSCR loans can qualify on the rent.
What to send me
- Your current mortgage statement, and any other loan against the house
- What you're trying to fix: the rate, the term, the mortgage insurance, the ARM, or a name on the loan
- Your usual income documents: pay stubs and W-2s, or tax returns if you're self-employed
- Your divorce decree, if one is involved
- Whether your current loan is a Texas home equity loan, and when it closed
Ready when you are.
Send the short form, call, or email. Tell me what you owe, roughly what the house is worth, and what you want to change. I'll tell you what it costs, what it changes, and how long it takes to come out ahead. If it doesn't pencil out, I'll say so.
I always start with a soft pull, so no hard credit ding.
Rate-and-term refinance questions
What is a rate-and-term refinance?
A new loan that pays off the loan you have now, plus the costs to do it, without putting cash in your pocket. You're changing the rate, the term, the loan type, or who's on the loan. If you want cash out of your Texas homestead, that's a cash-out refinance, and it follows different rules.
Can I get any cash back on a rate-and-term refinance in Texas?
Not really. On your homestead, the Texas Constitution says a refinance can only add funds for the reasonable costs of the refinance, required reserves for taxes and insurance, and a few narrow purposes like property taxes. Anything beyond that makes it a Texas home equity loan, with the 80% cap and the 12-day wait.
Can I refinance to get rid of PMI or FHA mortgage insurance?
Often, yes. If your home has gone up in value or you've paid the loan down, a new conventional loan may not need mortgage insurance at all. On a conventional loan, PMI can also come off without a refinance once you hit the federal thresholds. On many FHA loans, the annual premium stays for the life of the loan, so a refinance is the usual way out.
Can I take my ex-spouse or a co-borrower off the loan?
Usually by refinancing into a new loan in your name, and you'd need to qualify on your own. Taking someone off the deed is a separate step done by the title company or an attorney. If it's part of a divorce and you're buying out your ex's equity, Texas treats that as its own kind of lien. Bring me the decree early.
Can I refinance my Texas home equity loan into a regular loan?
Yes, if four things are true: it's been at least a year since the home equity loan closed, you take no new cash beyond paying off the debt plus actual costs and required reserves, the new loan plus anything else owed stays at or under 80% of the home's value, and you get a specific written notice at least 12 days before closing. You'd give up some home equity protections, so read that notice.
When does a rate-and-term refinance make sense?
When what you save, or what you fix, beats what it costs, and you plan to keep the loan long enough to come out ahead. I'll show you the closing costs next to what changes and tell you if it's worth it. If it isn't, I'll say so.
Apply Now (opens in new tab)Tell me the deal
I always start with a soft pull, so no hard credit ding.
General information, not legal advice. The Texas rules come from the Texas Constitution, Article XVI, Section 50, and the state's official interpretations at 7 TAC 153.41 and 7 TAC 153.45. Subject to qualification and program guidelines. Not all applicants will qualify. Not a commitment to lend.
More answers on the FAQ page, or see Fort Worth home loans. Or head back home.