Is Refinancing Worth the Cost?
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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points under your existing one? That might have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage loan! Refinancing has some advantages that can make it worth the up-front cost several times over.
Advantages
You may be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced loan. Additionally, you might be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build up home equity faster by changing to a shorter term mortgage loan.
Fees and Expenses
As you probably know, you will have some fees and expenses during the process of refinancing. You will be charged the same sort of expenses and fees as you did with your current home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can help you attain a lower interest rate. The amount you will save over the life of the mortgage could be significant if you have paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.
Another expense that a borrower may consider is that a lower interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 3032282254 to help you do the math.
In the end, for most borrowers the amount of initial costs to refinance are paid back soon in monthly savings. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 3032282254 to get you started.
Want to know more about refinancing your home? Give us a call at 3032282254.