Is Refinancing Worth the Cost?
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Looking for a mortgage loan? We'd be thrilled to discuss your mortgage needs! Call us at 3032282254. Ready to get started? Apply Online 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 2 points lower than your current one? That might have been valid a while back, but since refinancing has been costing less recently, it's never the wrong time to explore the options of a new mortgage! Refinancing has some benefits that can make it worth the initial expenditure a few times over.
Benefits from Refinancing
You might be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage loan. You might also have the ability to "cash out" a portion of your equity, which you will be able use to consolidate debt, add on to your home, or plan a vacation. With lower rates, you might also be able to build your home equity faster by switching to a shorter term mortgage.
The Cost
All of these advantages do cost something, though. When you refinance, you're paying for basically the same things you paid for when you obtained your current mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might think about paying points to receive a lower interest rate. The amount you will save on the life of the mortgage could be significant if you've paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on rumors that any paid points may be deducted on your taxes.
An additional expense that a borrower may consider is that a lower interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 3032282254.
In the end, for most borrowers the amount of up-front costs to refinance will be made up very quickly in monthly savings. We'll work with you to determine which loan program is the right fit for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing could effect your taxes. Call us at 3032282254 to get started.
Curious about refinancing your home? Give us a call at 3032282254.