Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it could be time to take a serious look. Refinancing has a number of advantages that often make it worth the initial expenditure several times over.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with a refinanced loan. You might also be able to "cash out" some of the built-up equity in your residence, which you may use to take care of higher interest debts, improve your home, or take a vacation. With reduced interest rates, you may also get the chance to build up home equity more quickly by changing to a shorter-term loan.
Expenses and Fees
As you probably know, you'll have to pay for the process of refinancing. When you refinance, you are paying for basically the same things you were charged for when you obtained your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to get a reduced interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the term of the refinanced mortgage can be substantial. We recommend that you talk to a tax professional before acting on rumors that these points paid may be deducted on your federal income taxes.
One more expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you will be able to deduct on your taxes. Call us at 4104614043 to help you do the math.
In the end, for most borrowers the amount of up-front costs to refinance will be made up soon in savings each month. We can help you find out your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at 4104614043 to get started.
Want to know more about refinancing your home? Call us at 4104614043.