When is Refinancing Worth it?
Shopping for a mortgage? We'll be glad to discuss your mortgage needs! Call us at 7184417000. Want to get started? Apply Online Now.
Some have said that only when your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That might have been sound advice a while back, but as refinancing has been costing less recently, it is never the wrong time to think about a new mortgage loan! Refinancing your mortgage has a variety of advantages that will often make it worth the up-front cost many times over.
Benefits from Refinancing
When you refinance, you could have the ability to lower your interest rate and mortgage payment amount, sometimes significantly. You also could be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter term mortgage.
All these advantages do cost something, though. You'll be charged the same types of expenses and fees as you did with your current home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can result in a better interest rate. The money you'll save on the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan balance. You might have heard that these points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to consult with a tax professional before making any decisions based on this.
One more expense that borrowers may take into account is that a lower rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 7184417000 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 7184417000 to get started.
Want to know more about refinancing? Give us a call at 7184417000.