Is Refinancing Worth the Cost?
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Are you looking for a mortgage loan? We'd be thrilled to discuss your mortgage needs! Give us a call at 8102292820. Want to get started? Apply Here.
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It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be time to take a serious look. A refinance may be worth its cost many times over, factoring in the benefits that it brings, as well as a reduced interest rate.
Benefits
You may be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced loan. You may also have the ability to "cash out" some of your home equity, which you will be able use to consolidate debts, improve your home, or plan a vacation. With reduced rates, you may also be able to build up home equity faster by changing to a shorter term loan.
Fees and Expenses
All of these advantages do cost something, though. You'll pay the same kinds of fees as with your current mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might need to pay points (prepaid interest) to attain a lower rate of interest. When you pay (on average) 3% of the loan amount initially, your savings for the life of the refinanced mortgage can be substantial. Please consult with a tax professional before acting on advice that these points paid may be deducted on your taxes.
Another cost that a borrower may consider is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 8102292820.
Most borrowers find that the savings each month quickly balance out the up-front expenses of refinancing. We will work with you to determine which loan program is right for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing might have on your taxes. Call us at 8102292820 to get started.
Curious about refinancing? Call us at 8102292820.