Weighing the Options of Refinancing

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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. That may have been accurate years ago, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new mortgage loan! A refinanced loan can be worth its cost many times over, factoring in the advantages that come, in addition to a reduced interest rate.

Benefits

You may be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced loan. You might also be able to "cash out" some of your equity, that you can use to consolidate debt, add on to your home, or plan a vacation. With lower rates, you may also get the chance to build up home equity more quickly by switching to a shorter-term mortgage.

Expenses and Fees

Of course, you'll have to pay for the the refinance process. You will pay the same types of fees as with your present mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might look into paying points to get a lower interest rate. The amount you'll save on the life of the mortgage could be significant if you have paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on rumors that any points paid can be deducted on your taxes.

An additional cost that borrowers might take into account is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. Call us at 718-441-7000 to help you do the math.

In the end, for most borrowers the total of up-front costs to refinance are paid back soon in monthly savings. We can help you find out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 718-441-7000 to get you started.

Curious about refinancing your home? Call us: 718-441-7000.

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