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Is Home Refinancing Right for You?

Since the Federal Reserve’s emergency rate cut in March, homeowners everywhere have been wondering if now is the time to refinance. Of course, each person’s needs and goals are different. At Central Bank, we strive to offer personalized financial solutions to each of our customers. In this article, we’ll share general tips for making a refinancing decision. We also encourage you to contact our Houston-based lenders to discuss your own situation in more detail.

When does it make sense to refinance?

The answer to this question will depend on what you’re hoping to achieve with a mortgage refi. Here are the most common scenarios:

  • Rate-and-term financing: Get a lower rate than your current rate and save on interest over the life of the loan. You may also want to extend your loan term to reduce your monthly payments. If your credit score has gone up since you originally applied for your mortgage, you may be able to get a lower rate now.
  • Cash-out refi: If your house has a market value higher than your mortgage balance, you can refinance into a larger mortgage and take cash out of your equity. Borrowers typically use a cash-out refinance to pay off higher interest debt, such as credit card balances, and/or to finance home renovations.
  • Loan type refi: Fixed-rate borrowers may want to refinance into an adjustable-rate mortgage (ARM) to take advantage of rates that continue to fall. On the other hand, ARM borrowers in a rising rate environment may want to switch to a fixed-rate mortgage to lock in current low rates.

Is refinancing right for you?

Here are the most important factors to consider as you try to answer this question.

  • Break-even point: When will the costs of refinancing equal the savings you’ve accrued?
  • Review your credit score: The higher your score, the lower the rate you can qualify for.
  • Phase of your mortgage term: Refinancing usually makes the most sense when you’re in the earlier part of your loan term (unless you’re looking to do a cash-out refi).

How long does it take to break even on the costs of refinancing?

Because refinancing means taking out a new mortgage loan, you’ll have to pay closing costs on your new loan, just like the original. The simplest way to calculate your break-even point is to divide total closing costs by the amount of money you’ll save each month on interest.

How long does it take to refinance a mortgage?

At Central Bank, we pride ourselves on making the mortgage approval process as swift and smooth as possible. You can help keep things on track by providing requested documents in a timely fashion.

Contact a Mortgage Loan Officer today!

Ready to learn more about mortgage refinancing or start the application process? Call a Mortgage Loan Officer at 832.485.2316, visit your nearest Houston location, or email us at We can help you figure out if now is the right time for you to refinance.