When is Refinancing Worth it?
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Some have said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. That might have been good advice years ago, but with refinancing dropping in cost recently, it is a good time to explore the options of a new mortgage loan! Refinancing your mortgage has some advantages that often make it worth the initial cost many times over.
Benefits
When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , sometimes considerably. You also may be given the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you may also be able to build up home equity faster by moving to a shorter term mortgage.
Fees and Expenses
Of course, you'll have to pay for the process of refinancing. You'll have the same sort of fees as with your existing mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might need to pay points (prepaid interest) to attain a lower interest rate. Your savings over the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on advice that any points paid can be deducted on your federal income taxes.
Speaking of taxes, if you lower your interest rate, naturally you will also be reducing the paid interest amount that you can deduct from your federal income taxes. This is one more cost that borrowers consider. Call us at 8102292820 to help you do the math.
All things considered, for most the amount of up-front costs to refinance are made up soon in savings each month. We'll work with you to figure out what mortgage program is the best fit for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and how refinancing can effect your taxes. Call us at 8102292820 to get you started.
Want to know more about refinancing your home? Give us a call at 8102292820.