Weighing the Options of Refinancing

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Ever hear the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least two points lower than your present rate? Maybe several years ago that was good advice, but since refinance costs have been getting lower, it could be time to look into it. A refinance is often worth its cost many times over, because of the advantages that it brings, in addition to a lower interest rate.

Benefits

When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , perhaps significantly. You also may be given the option of tapping into the equity in your property by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage loan, giving you the ability to add to your equity quicker.

Fees and Expenses

Of course, you will have to pay for your process of refinancing. When you refinance, you are paying for basically the same things you were charged for during your original mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can get you a better interest rate. The money you'll save on the life of the loan may be significant if you've paid up front about 3% of the new loan balance. You might have heard that these points can be tax deductible, but because tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before making decisions based on this.

Another thing about taxes is that when you bring down your interest rate, it follows that you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers take into account. We can help you do the math! Call us at (303) 228-2254.

Most borrowers find that the savings per month balance out the initial expenses of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, if 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 you started.

Curious about refinancing your home? Give us a call at (303) 228-2254.

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