When is Refinancing Worth it?
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Shopping for a mortgage? We'd be thrilled to talk about our mortgage offerings! Call us at 7184417000. Ready to begin? Apply Here.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least 2 points below your current rate? That could have been accurate years ago, but with refinancing dropping in cost recently, it's never the wrong time to consider a new mortgage! A refinance can be worth its cost several times over, factoring in the advantages that it brings, as well as a reduced interest rate.
Benefits from Refinancing
You might be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. Additionally, you might be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build your equity quicker.
The Cost
All these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for when you obtained your current mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could need to pay points (prepaid interest) to gain a better interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the term of the refinanced mortgage loan can be substantial. Please consult with a tax professional before acting on hear-say that the points paid can be deducted on your federal income taxes.
An additional expense that borrowers might consider is that a reduced interest rate will lower the interest amount you'll deduct from your taxes. Call us at 7184417000 to help you do the math.
Most people find that the savings per month quickly outweigh the initial cost of a refinance. We will work with you to determine which loan program is the best fit for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing could have on your taxes. Call us at 7184417000 to get you started.
Want to know more about refinancing your home? Call us: 7184417000.