Weighing the Options of Refinancing

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Ever hear the old rule of thumb that says you should only refinance if your new interest rate will be at least 2 points lower than your current one? Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to look into it. Refinancing has a number of benefits that will often make it worth the initial cost several times over.

Benefits

When you refinance, you could be able to lower the interest rate and mortgage payment , perhaps significantly. Additionally, you might have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also be able to build up home equity more quickly by switching to a shorter-term loan.

Expenses and Fees

Of course, you'll have some fees and expenses during the process of refinancing. You will pay the same kinds of expenses and fees as you did with your present mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to reduce your interest rate. Your savings on the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan total. You might have heard that points may be deducted on your income taxes, but as tax regulations can be ever-changing, please consult a tax professional before depending on this.

Speaking of taxes, if you lower your interest rate, naturally you'll also be reducing the paid interest amount that you can deduct from your federal income taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (718) 639-9500.

In the end, for most the total of initial costs to refinance are made up very quickly in monthly savings. We'll work with you to find out which loan program is right for you, considering your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing could have on your taxes. Call us at (718) 639-9500 to get you started.

Want to know more about refinancing? Give us a call: (718) 639-9500.

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