When is Refinancing Worth it?
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In the market for a new mortgage? We'd be thrilled to talk about our many mortgage solutions! Give us a call at 7184417000. Ready to get started? Apply Here.
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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but as refinance costs have been falling recently, it may be a good time to take a serious look. A refinance can be worth its cost many times over, because of the benefits that can come, as well as a reduced interest rate.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced loan. Additionally, you might have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage, giving you the ability to build up your equity faster.
The Cost
All these advantages do cost something, though. You'll pay the same types of fees as you did with your existing mortgage. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can help you attain a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the life of the new loan can be substantial. Please consult with a tax professional before acting on rumors that these points paid can be deducted on your taxes.
Another thing about taxes is that if you lower your interest rate, naturally you'll also be lowering the interest amount that you can deduct from your federal income taxes. This is another expense that some borrowers consider. Call us at 7184417000 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance will be paid back very quickly in monthly savings. We'll help you find out what loan program is best for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing will have on your taxes. Call us at 7184417000 to get started.
Want to know more about refinancing your home? Call us at 7184417000.