Weighing the Options of Refinancing
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it may be a good time to look into it. Refinancing your loan has a variety of benefits that can make it worth the initial expenditure a few times over.
Benefits
When you refinance, you may have the ability to lower your interest rate and monthly payment , perhaps by a lot. Additionally, you may have the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter-term loan.
Expenses and Fees
As you probably know, you will have to pay for your process of refinancing. When you refinance, you are paying for basically the same things you paid for at the time you obtained your original mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying points can result in a better interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the new mortgage loan can be substantial. You might have heard that the points can be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult with your tax professional before considering this in your calculations.
Speaking of taxes, once you reduce your interest rate, it follows that you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is one more expense that some borrowers take into consideration. Call us at 7184417000 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be made up soon in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at 7184417000 to get started.
Want to know more about refinancing? Call us: 7184417000.