Weighing the Options of Refinancing
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Ever hear the old rule of thumb that states you should only consider refinancing if the new interest rate is at least two points lower than your existing one? That may have been valid years ago, but as refinancing has been costing less in recent years, it's a good time to think about a new mortgage! Refinancing your mortgage loan has a number of benefits that will often make it worth the up-front expenditure several times over.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced loan. You could also be able to "cash out" some of your equity, which you can use to consolidate debts, make home improvements, or plan a vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to add to your equity faster.
Fees and Expenses
Of course, you'll have to pay for your the refinance process. You'll have to pay the same sort of expenses and fees as with your present home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can help you get a lower interest rate. Your savings over the life of the loan could be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that any points paid can be deducted on your taxes.
Speaking of taxes, once your interest rate is lowered, it follows that you will also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that borrowers take into consideration. Call us at 4104614043 to help you do the math.
Most people find that the savings each month outweigh the initial cost of refinancing. We'll work with you to determine which loan program is ideal 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? Call us: 4104614043.