Refinance Your Home Loan in Frisco & DFW

What Is a Refinance?

A refinance pays off your current mortgage with the money from a new one. From then on, you make payments on the new loan, under its own rate, term and costs. Homeowners often refinance to try to lower the cost of their mortgage, but there are usually tradeoffs, so it is worth doing only when it serves a clear goal.

AXS Mortgage helps homeowners in Frisco, Plano, McKinney, Dallas, Fort Worth and nearby communities look at refinancing on FHA and conventional loans. Whether a refinance is available to you, and on what terms, depends on a review of your loan, your property and your finances.

Rate-and-Term vs. Cash-Out Refinance

When a Refinance May (or May Not) Make Sense

A refinance can help when it moves you toward a specific goal. It can work against you when the costs and tradeoffs outweigh the benefit.

It may make sense when:

• You want a lower interest rate or monthly payment and expect to keep the home long enough to recover the costs.
• You want to shorten your loan term, which can mean paying less total interest but may raise your monthly payment.
• You want the certainty of a fixed rate in place of an adjustable rate.
• You need cash for a major purpose and have compared a cash-out refinance with a home equity loan or HELOC.

It may not make sense when:

• You plan to move in the next few years, so there may not be time to recover the cost of refinancing.
• Your credit standing has declined since you took your current loan, which can affect the terms you are offered.
• The value of your home has fallen, which can make a better loan harder to find.
• Your current mortgage has a prepayment penalty, which you would owe if you refinance.
• A longer new term would lower your payment but could raise your total cost over the life of the loan.

Costs to Weigh and the Break-Even Idea

A refinance usually involves many of the same steps, and many of the same costs, as your original mortgage. Common costs include:

• Lender origination and processing fees
• An appraisal, when one is required
• Title services and title insurance
• Prepaid items such as property taxes, homeowners insurance and interest

Loans advertised as having no closing costs do not remove those costs. The lender typically either charges a higher interest rate in exchange for a credit or adds the costs to your loan balance, and both have tradeoffs.

The break-even idea helps you judge the cost. Divide the upfront cost of the refinance by how much you expect to save each month. The result is roughly how many months you would need to keep the new loan before the savings outweigh the cost. If you might sell or refinance again before then, the refinance may not pay off. This is a simple rule of thumb: it does not account for a longer term, cash taken out or changes to your escrow, so review the full picture with a loan officer.

What to Expect: The Refinance Process

1. 1

   Share your goal

   Tell us why you are considering a refinance: a different rate, a different term, a different loan type, or cash out. The goal shapes everything else.

2. 2

   Apply and provide documents

   Lenders commonly ask for recent pay stubs, W-2s, tax returns, bank statements and a photo ID, along with details of your current mortgage and homeowners insurance. Your loan officer will confirm the exact list for your situation.

3. 3

   Review your Loan Estimate

   After you apply, you receive a Loan Estimate that shows the loan's features and costs, including whether there is a prepayment penalty. Compare it against your goal before you go further.

4. 4

   Appraisal and underwriting

   Depending on the loan, an appraisal may be ordered to determine your home's value, and the lender reviews your credit, income, assets and the property.

5. 5

   Closing

   You review your Closing Disclosure and sign the final documents. For many refinances of a primary home, federal law gives you a right to cancel within three business days after closing, and your closing documents explain how that works.

Cash-Out Refinancing in Texas: What Is Different

The Texas Constitution limits how a homestead can secure a loan. If a refinance puts extra cash in your hands, it generally must qualify as a home equity loan under Article XVI, Section 50(a)(6). There are narrow exceptions, for example when the additional funds only cover the reasonable costs of the refinance. Texas cash-out loans carry their own set of requirements and borrower protections.

Key rules for a Texas cash-out loan

• 80 percent limit: the new loan plus every other debt secured by the home cannot exceed 80 percent of the home's fair market value on the date the loan is made.
• 12-day wait: the loan cannot close before the 12th day after the later of the date you submit your application or the date the lender gives you the required notice. It also cannot close before one business day after you receive the final itemized disclosure of fees and costs.
• Once-a-year limit: the loan cannot close before the first anniversary of the closing date of another Section 50(a)(6) loan on the same homestead, with limited exceptions.
• Fee cap: many fees to originate, evaluate, insure and record the loan are limited to two percent of the original loan amount, not counting interest or bona fide discount points, and excluding items such as a third-party appraisal, a survey and the state base premium for title insurance.
• Borrower protections: the loan is generally without personal liability unless there was actual fraud, it can be foreclosed only by a court order, it can be paid off early without penalty, and it must close at the office of the lender, an attorney or a title company.

How it differs from a home equity loan

Both are governed by Section 50(a)(6). A cash-out refinance replaces your existing mortgage with one new, larger loan. A home equity loan is a separate loan taken in addition to your mortgage, and a HELOC is a revolving line of credit with its own rules. Which one fits can depend on your current loan and how much you need. Compare them on our Home Equity Loans & HELOCs page.

If your current loan is already a Texas home equity loan, refinancing it into a non-home-equity loan has its own conditions, including waiting until the first anniversary of the original closing and staying within 80 percent of your home's value.

These rules come from the state constitution, can be amended, and lenders and investors may add requirements. Read the official text of Texas Constitution Article XVI and the CFPB's Should I refinance? guide, then confirm current requirements with your loan officer.

Frequently Asked Questions