When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least two points lower, should you refinance your loan. Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage loan is often worth its cost many times over, considering the advantages that it brings, in addition to a lower interest rate.
Advantages
You may be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced loan. Additionally, you might have the option of pulling out some of the equity in your home by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.
The Cost
Of course, you will have to pay for the the refinance process. With your refinance, you're paying for basically the same things you paid for during your original mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can help you get a lower interest rate. Your savings over the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan balance. You might hear that the points can be deducted on your income taxes, but as tax regulations are difficult to keep up with, please consult your tax professional before considering this in your calculations.
Speaking of taxes, when you bring down your interest rate, naturally you'll also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers take into consideration. Call us at 7209331025 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the up-front cost of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 7209331025 to get you started.
Curious about refinancing? Call us: 7209331025.