Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'll be glad to discuss your mortgage needs! Give us a call at 8102292820. Ready to get started? Apply Now.
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Some have said that only when your new interest will be at least two points lower, should you refinance your mortgage. Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing your mortgage loan has a variety of advantages that will often make it worth the up-front expenditure many times over.
Advantages of Refinancing
You might be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage. You also may have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also be able to build your home equity more quickly by moving to a shorter term mortgage loan.
The Cost
All of these benefits do cost something, though. You'll have to pay the same sort of expenses and fees as with your present home loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might offer to pay discount points (prepaid interest) to get a lower rate of interest. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the refinanced mortgage can be great. You might hear that the points may be tax deductible, but because tax regulations are difficult to keep up with, please speak with a tax professional before considering this in your calculations.
One more expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 8102292820.
Ultimately, for most people the total of initial costs to refinance are paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 8102292820 to get you started.
Curious about refinancing? Call us: 8102292820.