Should I Refinance?

When deciding whether refinancing your mortgage is worth it, there are several key factors to consider:

1. Current Interest Rate vs. New Rate: One of the most important factors is the difference between your current mortgage rate and the new rate you could qualify for. If refinancing allows you to secure a significantly lower rate, you could reduce your monthly payments and save on interest over the life of the loan.
2. Loan Term: Consider how refinancing could affect your loan term. You may want to shorten your term to pay off your mortgage faster and save on interest, or lengthen it to lower your monthly payments. A longer term, however, could increase the total interest paid over time.
3. Closing Costs: Refinancing comes with costs, such as appraisal fees, origination fees, and closing costs, which typically range from 2% to 5% of the loan amount. To determine if refinancing is worth it, calculate how long it will take for your interest savings to offset these costs (often referred to as the ‘break-even point’).
4. Remaining Time in Your Home: If you plan to stay in your home for a while, refinancing could be beneficial. However, if you plan to move soon, you may not recoup the upfront costs of refinancing before selling your home. Be sure to factor in your long-term plans when making your decision.
5. Loan Type: If you currently have an adjustable-rate mortgage (ARM) and are concerned about rising rates, refinancing to a fixed-rate mortgage could offer more stability and predictable payments. Conversely, if you have a fixed-rate mortgage but rates have dropped, refinancing to a lower-rate loan could save you money.
6. Credit Score and Financial Health: Your credit score and overall financial health will affect the interest rates and loan terms you qualify for when refinancing. If your credit score has improved since you took out your original mortgage, refinancing could help you secure better terms.

Our Mortgage Refinance Calculator can help you evaluate these factors by showing you how much you could save and how refinancing could impact your monthly payments. We also have more helpful content and resources in our Buying a Home Life Guidance section.

Deciding the right rate to refinance your mortgage depends on several factors, including your current interest rate, the costs of refinancing, and your long-term financial goals. While there is no one-size-fits-all answer, a general rule of thumb is that refinancing may be worth it if you can reduce your interest rate by at least 0.5% to 1%.

Here are some considerations when determining if refinancing at a certain rate is beneficial:

1. Rate Reduction: A significant reduction in your interest rate – typically at least 0.5% to 1% – could lower your monthly payments and reduce the amount of interest you pay over the life of your loan. Even a small percentage drop can result in substantial savings, especially on larger mortgage balances.
2. Break-Even Point: Calculate how long it will take for the savings from a lower rate to cover the closing costs associated with refinancing (this is known as the break-even point). If you plan to stay in your home long enough to recoup those costs, refinancing at a lower rate may be a smart financial move.
3. Loan Term: Consider whether you want to shorten or extend your loan term. Refinancing to a shorter term, even at a slightly lower rate, could help you pay off your mortgage faster and save on interest. Conversely, extending your loan term could lower your monthly payments but increase the total interest paid over time.
4. Market Conditions and Your Credit: The interest rate you qualify for will depend on current market conditions and your credit score. If your credit score has improved since you first took out your mortgage, you may be eligible for better rates, making refinancing more advantageous.

We provide tools like this Free Mortgage Refinance Calculator to help you explore different rates and see how they could affect your monthly payments and overall savings. Our team of financial advocates is also available to provide personalized advice, helping you determine if refinancing at a specific rate aligns with your financial goals.

Historically, a good refinance rate for a mortgage is generally considered to be one that is lower than the average prevailing rates at the time and significantly lower than your current mortgage rate. Over the past few decades, average mortgage rates have fluctuated widely, influenced by economic conditions, inflation, and monetary policy.

• Pre-2000s: Mortgage rates were typically higher, often in the range of 7% to 9% or more. At that time, a good refinance rate might have been anything below 7%.
• 2000s: Rates started to decline, and a good refinance rate was often considered to be in the range of 5% to 6%.
• 2010s: Following the Great Recession, mortgage rates fell to historic lows, with rates often dipping below 4%. During this period, a good refinance rate was commonly considered anything around or below 4%.
• 2020-2021: The COVID-19 pandemic caused rates to drop to all-time lows, with many homeowners securing rates below 3%. During this period, a refinance rate below 3% was considered excellent.

In today’s market, what constitutes a ‘good’ refinance rate depends on current economic conditions and your personal financial situation. A “good” rate can be 0.5% to 1% lower than your current rate, depending on your loan balance, credit score, and how long you plan to stay in your home.

Our financial advocates are also here to provide personalized guidance, ensuring you make an informed decision based on both historical trends and your current financial needs.

Current Home Refinance Rates

When refinancing a mortgage in Texas, the best type of financial institution often depends on your individual financial situation, the rates and terms offered, and the level of customer service you desire. Here are some key options to consider:

1. Credit Unions: Credit unions, such as A+ Federal Credit Union, are often a great choice for refinancing because they are member-owned, not-for-profit institutions that tend to offer lower interest rates and fees compared to traditional banks. Credit unions focus on serving their members’ best interests and often provide more personalized service, flexible terms, and competitive rates. Additionally, their community-focused approach can offer a supportive experience and gives them more familiarity with the specific needs of area homeowners.
2. Local and Regional Banks: Local and regional banks can also be a good option for refinancing, as they tend to offer competitive rates and can also be familiar with the needs of homeowners in the state. These banks often have a presence in the community and can provide a more personalized experience than larger national banks.
3. Online Lenders: Online mortgage lenders have gained popularity due to their convenience and often lower overhead costs. These lenders may offer competitive rates and streamlined digital processes for refinancing. However, it’s important to thoroughly research the lender’s reputation and terms to ensure you’re getting the best deal.
4. Mortgage Brokers: Mortgage brokers can help you shop around for the best refinance rates by comparing offers from multiple lenders. They can save you time and potentially find you competitive rates that you may not have discovered on your own. However, they may charge fees for their services, so it’s important to weigh those costs.

At A+FCU, we provide competitive rates, flexible terms, and personalized service to help you refinance your mortgage in a way that aligns with your financial goals. Our helpful financial resources and tools can help you assess your options, and our team of financial advocates is ready to help guide you through the process.

Yes, you generally have to pay closing costs when you refinance your mortgage. Closing costs are the fees and expenses required to complete the refinancing process, and they typically range from 2% to 5% of the loan amount. These costs can vary depending on factors like the lender, the loan size, and your location.

Here are some common types of closing costs associated with refinancing:

1. Loan Origination Fees: This is a fee charged by the lender to process your new loan. It can range from 0.5% to 1% of the loan amount.
2. Appraisal Fees: The lender may require a new appraisal of your home to determine its current value, which typically costs between $300 and $500.
3. Title Insurance and Title Search Fees: These fees protect the lender in case there are issues with the title to your home. Title insurance and related services can cost anywhere from $500 to $1,000.
4. Credit Report Fees: Lenders typically charge a fee to pull your credit report, which can range from $25 to $50.
5. Attorney Fees: In some states, including Texas, attorney fees may be part of the closing costs, typically ranging from $500 to $1,000.
6. Other Fees: Additional costs may include application fees, recording fees, and discount points if you choose to buy down your interest rate.

While closing costs are an upfront expense, refinancing could still be beneficial if the long-term savings from a lower interest rate outweigh these costs. The A+FCU Mortgage Refinance Calculator can help you estimate how much you could save and whether refinancing makes sense for your financial situation. Our helpful lending team is also available to help you navigate the costs and benefits of refinancing.

Refinancing your mortgage can impact your credit score, though typically the effects are temporary. Here’s how refinancing may affect your credit:

1. Hard Inquiry: When you apply for a refinance loan, the lender will perform a hard inquiry on your credit report. This can cause a slight dip in your credit score, usually by a few points. However, the impact is temporary and often fades within a few months.
2. New Credit Account: Refinancing creates a new credit account, and your previous mortgage account may be closed. Closing an old account and opening a new one can shorten the length of your credit history, which could lower your credit score slightly.
3. Debt-to-Income Ratio: If refinancing lowers your monthly payments, it could improve your debt-to-income ratio, which may positively impact your credit over time. However, if you take on additional debt during the process, this could negatively affect your score.

The overall impact of refinancing on your credit score is usually minimal and temporary, especially if you maintain good financial habits, such as making timely payments on your new loan. At A+FCU, we’re committed to helping you make informed decisions that support your financial well-being.

Refinancing your home can offer significant financial benefits, but it’s important to weigh the pros and cons before making a decision. Here’s an overview to help you consider whether refinancing is right for you:

Pros of Refinancing

1. Lower Interest Rates: Refinancing can help you secure a lower interest rate, reducing your monthly payments and saving you money on interest over the life of the loan.
2. Lower Monthly Payments: By refinancing, you may extend the term of your mortgage, resulting in lower monthly payments that can free up cash for other financial goals.
3. Shorten Loan Term: If you refinance to a shorter loan term (e.g., from 30 years to 15 years), you could pay off your mortgage faster and reduce the amount of interest you’ll pay overall.
4. Switch Loan Types: Refinancing allows you to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, providing more stability and predictable monthly payments.
5. Access Equity: A cash-out refinance enables you to tap into your home’s equity, giving you access to funds that you can use for home improvements, debt consolidation, or other major expenses.
6. Debt Consolidation: Refinancing may offer an opportunity to consolidate higher-interest debts, such as credit cards, into one lower-interest mortgage payment.

Cons of Refinancing

1. Closing Costs: Refinancing comes with closing costs that typically range from 2% to 5% of the loan amount. These upfront costs can reduce the immediate financial benefit of refinancing.
2. Extended Loan Term: While extending your loan term can lower your monthly payments, it can also increase the total amount of interest paid over the life of the loan. This could mean staying in debt longer than planned.
3. Impact on Credit Score: Refinancing results in a hard inquiry on your credit report, which may temporarily lower your credit score. Additionally, opening a new loan and closing an old account could affect your credit history.
4. Risk of New Debt: If you opt for a cash-out refinance, there’s a risk of increasing your debt load by borrowing against your home’s equity. If home values decline or your financial situation changes, this could put you at risk of owing more than your home is worth.
5. Break-Even Point: It may take time to recoup the costs of refinancing, especially if you plan to sell your home in the near future. Calculating your break-even point is crucial to determine if refinancing is worthwhile.

At A+FCU, we create helpful financial resources and provide tools like our Free Mortgage Refinance Calculator to help you evaluate the potential benefits and costs of refinancing. Our knowledgeable team is also available to offer personalized guidance, helping you make the best decision for your financial future.

Mortgage refinance rates can vary based on several factors, including your credit score, loan amount, and the length of the loan term.

We frequently update our rates to keep them competitive and reflect current market conditions.

Mortgage Refinance Options

Yes, we offer a number of mortgage refinance options designed to provide flexibility for almost any financial situation. Whether you’re looking to lower your interest rate, adjust your loan term, or tap into your home’s equity, A+FCU provides mortgage refinancing options that can help you achieve your financial goals.

Using their Free Mortgage Refinance Calculator, you can estimate how refinancing might affect your monthly payments and overall savings. Additionally, our financial advocates are available to guide you through the refinancing process, ensuring that you find the best option for your unique situation.

Mortgage Refinance Options

Yes, you must be a member of A+ Federal Credit Union to refinance your mortgage with us. At A+FCU, we’re dedicated to serving our members with competitive rates, flexible terms, and personalized financial guidance. Becoming a member opens the door to many modern financial products and services designed to help you achieve your financial goals.

If you’re interested in refinancing your mortgage and are not yet a member, it’s easy to join:

Who Can Join A+FCU?

A+ Federal Credit Union partners with over 300 schools, districts, businesses, community organizations, and others to offer membership. The following groups are eligible to join:

1. Staff, students, and employees of partner organizations.
2. Family members of current A+FCU members.
3. You can also join by making a one-time dues payment of $10 to the A+ Education Foundation.

How Can I Join A+FCU?

The process for joining A+FCU is straightforward:

1. Complete the Online Application
2. Application Requirements: a Texas resident address and a valid email*
3. One-Time Membership Payment: If you’re not part of an eligible group, you can still join by making a one-time dues payment of $10 to the A+ Education Foundation when opening your account.

Our team is here to help you through the process and answer any questions you have about joining the A+FCU family.