Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points below your current rate, should you refinance your loan. Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it could be time to take a serious look. A refinanced mortgage is often worth its cost many times over, because of the advantages that may come, along with a reduced interest rate.

Advantages

When you refinance, you may have the ability to lower the interest rate and monthly payment amount, sometimes by a lot. You also could have the option of tapping into the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to build your equity faster.

The Cost

As you probably expect, you will have to pay for the process of refinancing. When you refinance, you're paying for most of the same things you were charged for at the time you obtained your existing mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You might consider paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the refinanced mortgage loan can be significant. Please talk to a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.

An additional expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (303) 228-2254.

Most borrowers find that the monthly savings outweigh the up-front expenses of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at (303) 228-2254 to get you started.

Curious about refinancing your home? Call us at (303) 228-2254.

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