When is Refinancing Worth it?
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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps several years ago that was sage advice, but as refinance costs have been falling recently, it could be a good time to look into it. A refinanced mortgage may be worth its cost many times over, considering the benefits that come, along with a reduced interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with a refinanced loan. You could also be able to "cash out" some of the built-up equity in your residence, which you may use to consolidate debts, improve your home, or plan a vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your home equity faster.
Fees and Expenses
All of these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for when you got your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might look into paying points to reduce your interest rate. The money you'll save on the life of the loan might be significant if you've paid up front about three percent of the new loan balance. You might be told that points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to speak with your tax professional before depending on this.
An additional cost that borrowers might consider is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. Call us at 7184417000 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the initial cost of refinancing. We will work with you to determine what loan program is best for you, considering your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing might have on your taxes. Call us at 7184417000 to get started.
Want to know more about refinancing? Call us at 7184417000.