Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least two points below your current rate, should you refinance your loan. Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing has a variety of benefits that will often make it worth the initial cost a few times over.
Benefits
You may be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage loan. Additionally, you may be given the option of pulling out some of the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to add to your home equity faster.
Expenses and Fees
All of these benefits do come with some expense, though. When you refinance, you are paying for many of the same things you paid for when you got your existing mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
Paying points can result in a better interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the refinanced mortgage loan can be great. We recommend that you consult a tax professional before acting on rumors that the paid points can be deducted on your taxes.
Another thing about taxes is that if you lower your interest rate, it follows that you'll also be reducing the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers take into account. 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 very quickly in monthly savings. We will work with you to determine which mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the near future, and how refinancing will effect your taxes. Call us at 8102292820 to get started.
Curious about refinancing your home? Call us at 8102292820.