Is Refinancing Worth the Cost?
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Looking for mortgage advice? We'll be glad to discuss your mortgage needs! Give us a call at 4104614043. Ready to get started? Apply Now.
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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your present one? Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing your loan has a number of advantages that will often make it worth the initial expenditure many times over.
Advantages
You might be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. You also may have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you may also get the chance to build up home equity faster by switching to a shorter-term mortgage.
Expenses and Fees
Of course, you'll have some fees and expenses during your the refinance process. When you refinance, you are paying for basically the same things you paid for at the time you obtained your original mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can help you attain a better interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the refinanced loan can be significant. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Speaking of taxes, if your interest rate is reduced, it follows that you'll also be lowering the paid interest amount that you can deduct on your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at 4104614043.
Most people find that the savings each month balance out the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 4104614043 to get you started.
Curious about refinancing? Give us a call: 4104614043.