Is Refinancing Worth the Cost?
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It has been said that only if your new interest will be at least two points under your current rate, should you refinance your mortgage. Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it could be time to look into it. A refinance may be worth its cost several times over, considering the advantages that it brings, in addition to a reduced interest rate.
Advantages
You may be able to lower your interest rate (sometimes significantly) and have smaller monthly payments with a refinanced loan. Additionally, you might have the option of tapping into the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage, giving you the ability to build up your home equity quicker.
Fees and Expenses
All of these advantages do cost something, though. You'll be charged the same sort of expenses and fees as you did with your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You might need to pay points (prepaid interest) to gain a better interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the life of the refinanced mortgage can be significant. We recommend that you consult with a tax professional before acting on advice that any points paid can be deducted on your taxes.
Another cost that a borrower may consider is that a lower rate of interest will reduce the interest amount you will deduct from your federal income taxes. Call us at 8102292820 to help you do the math.
Most people find that the savings each month quickly balance out the up-front expenses of a refinance. We'll help you find out which loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing might effect your taxes. Call us at 8102292820 to get started.
Curious about refinancing? Call us at 8102292820.