Is Refinancing Worth the Cost?
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Searching for mortgage advice? We will be glad to assist you! Give us a call today at 7209331025. Ready to begin? Apply Now.
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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least two points lower than your current one? Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a number of advantages that can make it worth the up-front expenditure several times over.
Advantages of Refinancing
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes significantly. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build your home equity quicker.
The Cost
Of course, you'll have some fees and expenses during the process of refinancing. When you refinance, you are paying for most of the same things you paid for during your existing mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying discount points can get you a better interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the term of the refinanced mortgage loan can be significant. You may hear that the points may be deducted on your income taxes, but as tax regulations are difficult to keep up with, we urge you to speak with a tax professional before making decisions based on this.
Another expense that a borrower might consider is that a lower rate of interest will lower the interest amount you will deduct on your taxes. Call us at 7209331025 to help you do the math.
In the end, for most the amount of initial costs to refinance are paid back very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 7209331025 to get started.
Curious about refinancing your home? Give us a call at 7209331025.