Is Refinancing Worth the Cost?
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Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate is at least two points lower than your current one? Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it may be time to take a serious look. A refinance may be worth its cost many times over, because of the advantages that it brings, as well as a reduced interest rate.
Advantages
When you refinance, you might be able to lower your interest rate and mortgage payment amount, perhaps considerably. You might also have the option to "cash out" some of the built-up equity in your home, which you may use to take care of higher interest debt, improve your home, or finance a vacation. You could have the option to refinance to a shorter-term mortgage loan, giving you the ability to build up your equity quicker.
Fees and Expenses
Of course, you'll have to pay for your the refinance process. You'll be charged the same kinds of expenses and fees as you did with your existing mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might think about paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount up front, the savings for the life of the refinanced mortgage can be substantial. We recommend that you talk to a tax professional before acting on advice that any paid points may be deducted on your taxes.
Speaking of taxes, if your interest rate is reduced, naturally you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is another cost that some borrowers take into consideration. Call us at 7184417000 to help you do the math.
Ultimately, for most people the total 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 might be to sell in the near future, and your available cash. Call us at 7184417000 to get started.
Want to know more about refinancing? Call us: 7184417000.