Weighing the Options of Refinancing
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Ever hear the old rule of thumb that states you should only refinance if your new interest rate is at least 2 points under your present rate? That may have been accurate years ago, but since refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new loan! A refinance is often worth its cost several times over, factoring in the benefits that come, in addition to a lower interest rate.
Advantages
When you refinance, you could be able to reduce the interest rate and monthly mortgage payment amount, perhaps by a lot. You may also be able to "cash out" a portion of the built-up equity in your home, which you are able use to consolidate debts, make home improvements, or plan a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to add to your home equity faster.
Expenses and Fees
Of course, you'll have to pay for the process of refinancing. You'll be charged the same kinds of fees as you did with your present mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can result in a lower interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the new mortgage can be significant. Please consult a tax professional before acting on hear-say that the points paid can be deducted on your taxes.
One more cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you will be able to deduct from your taxes. Call us at 7184417000 to help you do the math.
Ultimately, for most borrowers the total of up-front costs to refinance will be paid back soon in monthly savings. We'll help you determine what program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing will probably have on your taxes. Call us at 7184417000 to get you started.
Curious about refinancing? Call us: 7184417000.