Is Refinancing Worth the Cost?
 |
 |
 |
Shopping for a mortgage loan? We will be glad to assist you! Give us a call today at 8102292820. Ready to begin? Apply Online Now.
|
|
|
|
|
Ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least two points under your present rate? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be time to look into it. A refinance is often worth its cost many times over, considering the benefits that can come, as well as a lower interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced loan. You may also have the ability to "cash out" some of your equity, that you can use to take care of higher interest debt, make home improvements, or finance a vacation. With lower interest rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage.
The Cost
All these benefits do come with some expense, though. When you refinance, you are paying for most of the same things you paid for when you obtained your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might offer to pay discount points (prepaid interest) to get a better interest rate. Your savings on the life of the loan may be substantial if you've paid up front about 3% of the new loan total. You may hear that points can be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before considering this in your calculations.
Another cost that a borrower may take into account is that a reduced interest rate will lower the interest amount you'll be able to deduct from your federal income taxes. Call us at 8102292820 to help you do the math.
All things considered, for most people the total of initial costs to refinance will be made up very quickly in monthly savings. We'll work with you to determine what mortgage program is best for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing may have on your taxes. Call us at 8102292820 to get you started.
Curious about refinancing your home? Call us at 8102292820.