Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We'll be glad to answer your questions about our mortgage offerings! Give us a call today at 4104614043. Ready to begin? Apply Online Now.
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Have you ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least two points under your existing rate? Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it may be a good time to take a serious look. A refinanced mortgage may be worth its cost many times over, considering the benefits that it brings, along with a reduced interest rate.
Advantages
You may be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. You might also have the ability to "cash out" some of your home equity, which you will be able use to consolidate debt, improve your home, or take a vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to build your equity faster.
The Cost
All these benefits do cost something, though. When you refinance, you are paying for basically the same things you were charged for during your existing mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might offer to pay discount points (prepaid interest) to gain a more favorable rate of interest. When you pay (on average) three percent of the loan amount at the start, the savings for the term of the new mortgage loan can be significant. You may be told that points can be tax deductible, but as tax regulations can be difficult to keep up with, we urge you to consult with a tax professional before making decisions based on this.
One more cost that borrowers may take into account is that a reduced interest rate will lower the interest amount you will deduct from your federal income taxes. Call us at 4104614043 to help you do the math.
Most people find that the savings per month balance out the initial cost of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 4104614043 to get you started.
Want to know more about refinancing your home? Call us: 4104614043.