Weighing the Options of Refinancing
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It has been said that only when your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be a good time to look into it. A refinance is often worth its cost many times over, factoring in the advantages that it brings, as well as a lower interest rate.
Advantages
You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage loan. Additionally, you may have the option of pulling out some of your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to build up your home equity quicker.
Expenses and Fees
All of these advantages do come with some expense, though. You will have the same kinds of expenses and fees as you did with your current home loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying discount points can help you attain a better interest rate. Your savings on the life of the loan could be significant if you have paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.
An additional cost that a borrower might take into account is that a reduced rate of interest will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 4104614043.
Most people find that the savings per month balance out the initial expenses of a refinance. We will help you figure out what mortgage loan program is best for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing can effect your taxes. Call us at 4104614043 to get you started.
Want to know more about refinancing? Give us a call: 4104614043.