Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least 2 points under your current one? That may have been accurate a while back, but with the fact that refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! A refinanced mortgage loan may be worth its cost many times over, factoring in the benefits that come, along with a reduced interest rate.

Benefits

You may be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage loan. You could also have the ability to "cash out" a portion of the built-up equity in your home, that you may use to consolidate debt, add on to your home, or plan a vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to build your equity faster.

The Cost

As you probably expect, you'll have to pay for your process of refinancing. You will pay the same types of expenses and fees as with your present mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might investigate paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the life of the refinanced mortgage can be substantial. We recommend that you consult a tax professional before acting on hear-say that any points paid can be deducted on your taxes.

Another thing about taxes is that once you bring down your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at (718) 639-9500.

Most people find that the savings each month outweigh the initial cost of a refinance. We can help you find out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (718) 639-9500 to get you started.

Curious about refinancing? Give us a call: (718) 639-9500.

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