Contributor, Benzinga
June 10, 2020

Do you feel like your mortgage loan is no longer working for you? A refinance can allow you to access a lower monthly payment, take cash out of your home equity or get rid of FHA insurance. Our guide to the best mortgage companies and loan options in Texas will help you find the best refinance option for you. 

Refinance Calculator

Best Refinance Lenders in Texas

From Veterans United’s simple VA refinances to Quicken Loans’® comprehensive yet intuitive Rocket Mortgage® platform, Texas homeowners have a wide range of lender choices. If you don’t already have a lender in mind for your refinance, consider a few of our top choices below. 

Current Texas Refinance Rates

Mortgage rates can change on a weekly and sometimes daily basis. Locking into the lowest rate possible can save you thousands of dollars when you refinance. It’s worth the effort to track market interest rates and apply for your refinance when rates are the lowest.

Online mortgage lenders have made it easier than ever to compare interest rates before you apply for your new loan. Below you can see a small sample of what you might expect to pay for your refinance in Texas if you were approved today. Though your quote will depend on factors like your credit score, location and current loan value, you can use this chart to track average market rates. 

Loan TypeRateAPR
30-year fixed 6.226% 6.301%
15-year fixed 5.854% 5.994%
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) N/A N/A
Rates based on a loan amount of $180,000 and property value of $225,000.
See more mortgage rates on Zillow

Refinance Process

If you think refinancing might be right for your situation, it’s time to apply for a refinance home loan. It’s important to select the best refinance mortgage company for your needs. Consider factors like whether the company will sell your mortgage to another lender, its availability for customer service inquiries, current rates and fees and whether the lender has a good track record with other homeowners. 

Though refinancing may alleviate financial burdens associated with your current mortgage, be prepared to pay fees associated with the process. You can expect to pay fees including the following:

  • Refinance application. Even if your loan is denied, you’ll be responsible for the cost of applying to refinance.
  • Home appraisal. The lender will want a current value for your home, so you will likely be footing the bill for a home appraisal unless you take a streamline refinance.
  • Title search and insurance. Your lender needs to guarantee there are no liens taken out against the home and you are the rightful owner of the property you’re refinancing. If you’re working with a new lender, expect to pay for a new title search. You may also have to pay a 1-time insurance fee to protect both you and the lender against any issues with the title caused by an earlier homeowner. 

After submitting your application, the lender will need to begin the underwriting process to verify your application information for a new loan agreement. During this period, your lender will prepare your new loan and schedule your home appraisal. The entire underwriting process typically takes between 30 and 45 days, but it may take longer depending on where you live and the specific lender you work with. 

Once underwriting closes, you’ll attend a closing meeting to sign off on your new loan. Refinancing closing meetings usually take less time because there are no sellers or agents involved. Expect to spend about 30 minutes closing on your new loan. 

When Should You Refinance in Texas?

Refinancing a mortgage can be a smart way to reduce your overall debt load by reallocating home equity to other high-interest debt balances or renegotiating the terms of your loan. There are a number of reasons to refinance a mortgage in Texas, including:

  • A lower monthly payment. If you need a little extra cash each month or want to lower your payment, talk with your lender about a lower interest rate or lengthening your mortgage term. Lowering your rate may be a smart option if lending rates are lower now than when you bought your home. Alternatively, extending your mortgage term means you will have lower monthly bills in exchange for a longer term payment plan. 
  • Access to cash. If you need to prioritize cash income in the short term, talk to your lender about a “cash-out refinance.” A cash-out refinance is a special type of mortgage loan that allows you to take a portion of your property’s built equity in cash. In exchange, your lender gives you a loan with a higher principal balance. This can be a useful option if you have high-interest debt (like credit card debt or auto loan debt) that’s accumulating interest faster than your mortgage loan.
  • Shorter term. If you have the means to pay a higher monthly mortgage bill in exchange for a shorter loan term, you’ll likely benefit from lower interest rates. Shortening your loan’s term also enables you to own your home sooner and pay less in interest over time. 

You might also want to consider refinancing if you want to convert your loan from an FHA loan to a conventional loan to get rid of monthly FHA loan insurance. Keep in mind that you’ll need at least 20% equity in your property before you can pursue this option. 

When Should You Not Refinance?

Refinancing is not always the best option — even if you think you’re ready to renegotiate the terms of your loan. If any of the following apply to you, now might not be the best time to refinance.

  • Your closing costs are too expensive to pay upfront. Closing on a refinance loan can be expensive — even though it’s typically cheaper than closing on an initial home mortgage loan. You should still be ready to pay upfront for the cost of closing to avoid taking on a higher interest rate. 
  • You are planning to move in the next few years. Refinancing can save you money by securing a lower interest rate than your current loan, but you need to factor in the cost of closing on a new agreement as well. If you plan to move in the next few years, consider whether you might pay closing costs that outweigh the benefits of a new interest rate. 

You might also want to wait to refinance if you’ve only been living in your home for a few years and you want a cash-out refinance. To qualify for a cash-out refinance, you must have sufficient equity — which isn’t typically available in the first few years of your loan. 

Bad Credit Refinance

Credit scores play a huge role in renegotiating debt, including your home mortgage. If you have a lower credit score, you might find yourself limited in your options for lenders and qualifying loans. Even so, there are some options available even if you have a lower credit score. 

  • Streamline refinance. A streamline refinance is an expedited refinance option that doesn’t require credit checks or income verification. You can often get this kind of refinance without a new appraisal, which reduces the overall cost of refinancing a home loan. This option is available to homeowners with VA or FHA loans, and you must already have a government-backed loan to apply. You must also already have a history of timely mortgage payments before you can apply. 

This option also only applies if you want to refinance your rate or term. You must have a credit score of at least 620 points to qualify.

  • Apply with a non-occupying loan co-client. Even if you have bad credit, you may be eligible to refinance if you have what is known as a “non-occupying co-client.” This is someone who doesn’t live in your home but is willing to cosign and take financial responsibility on your loan if you default. Family or friends with great credit may be huge assets when refinancing if they are willing to cosign. 

Your co-client must agree to the refinance terms and assume a financial risk by agreeing to pay if you default. Take great care to ensure you can afford your new monthly mortgage payments to avoid having to fall back on your cosigner for financial assistance. 

Refinance on Your Terms

When you begin the refinance process, the 1st thing you likely need to know is the best place to refinance a mortgage loan. This isn’t an easy question to answer because the best lender for you will depend on your individual needs. 

Don’t be afraid to contact multiple competing lenders in your area before you choose where to apply to compare rates, fees, loan options and customer service availability. Just a few days of research can end up saving you tens of thousands of dollars by the time you own your home.

Get Ready for Take Off

Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.

You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.