When is Refinancing Worth it?
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points under your existing one? That may have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to consider a new mortgage! Refinancing your mortgage loan has a number of benefits that will often make it worth the up-front cost a few times over.
Benefits from Refinancing
When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment , sometimes considerably. You also could be given the option of pulling out some of the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you may also get the chance to build up home equity faster by switching to a shorter term loan.
Of course, you'll have to pay for the the refinance process. You will have the same types of expenses and fees as with your current home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might look into paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the new loan can be substantial. We recommend that you consult with a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.
One more cost that borrowers may consider is that a lower rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 3032282254.
Most borrowers find that the monthly savings outweigh the initial expenses of a refinance. We'll work with you to find out what mortgage program is right for you, considering your cash on hand, the likelihood of selling your home in the near future, and how refinancing can effect your taxes. Call us at 3032282254 to get you started.
Curious about refinancing your home? Call us at 3032282254.