When is Refinancing Worth it?
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Some have said that only if your new interest is at least two points under your current rate, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new loan! A refinance is often worth its cost many times over, because of the advantages that it brings, along with a lower interest rate.
Advantages of Refinancing
When you refinance, you could have the ability to lower your interest rate and monthly payment , perhaps significantly. You could also be able to "cash out" some of your equity, which you will be able use to consolidate debts, add on to your home, or plan a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter-term mortgage loan.
Fees and Expenses
All these benefits do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for at the time you got your existing mortgage. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new mortgage can be substantial. Please consult with a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.
An additional expense that borrowers may consider is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your federal income taxes. Call us at 7184417000 to help you do the math.
Most people find that the monthly savings balance out the initial expenses of refinancing. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 7184417000 to get started.
Curious about refinancing your home? Give us a call at 7184417000.