Is Refinancing Worth the Cost?
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It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it could be a good time to look into it. A refinance can be worth its cost several times over, factoring in the advantages that it brings, along with a lower interest rate.
Benefits from Refinancing
You may be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with your refinanced mortgage. You also might have the option of tapping into the equity in your home by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you may also be able to build your home equity more quickly by changing to a shorter-term loan.
Of course, you'll have some fees and expenses during your process of refinancing. You'll have the same types of expenses and fees as with your present mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to attain a more favorable rate of interest. When you pay (on average) three percent of the loan amount initially, your savings for the life of the new loan can be substantial. You may be told that these points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult your tax professional before making any decisions based on this.
One more expense that a borrower may take into account is that a lower interest rate will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 7186399500.
Most borrowers find that the savings each month balance out the initial expenses of refinancing. We will work with you to find out what mortgage program is right for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and what effect refinancing may have on your taxes. Call us at 7186399500 to get you started.
Curious about refinancing? Call us at 7186399500.