When is Refinancing Worth it?
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Some have said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. That could have been true years ago, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage! Refinancing has a variety of benefits that often make it worth the up-front expenditure a few times over.
Advantages of Refinancing
When you refinance, you may be able to reduce the interest rate and monthly payment , sometimes significantly. You may also have the option to "cash out" a portion of the built-up equity in your residence, that you can use to consolidate debts, improve your home, or finance a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build up your home equity quicker.
Fees and Expenses
All these benefits do cost something, though. You'll have the same types of expenses and fees as with your present mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can get you a lower interest rate. The money you'll save over the life of the loan may be significant if you have paid up front about three percent of the new loan total. You may have heard that these points can be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to consult your tax professional before making decisions based on this.
Another cost that borrowers may consider is that a reduced interest rate will reduce the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at (303) 228-2254.
Most people find that the savings per month outweigh the up-front expenses of a refinance. We can help you figure out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your cash on hand. Call us at (303) 228-2254 to get started.
Curious about refinancing your home? Give us a call: (303) 228-2254.