Weighing the Options of Refinancing
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced loan is often worth its cost many times over, factoring in the advantages that can come, as well as a lower interest rate.
Benefits
When you refinance, you could be able to reduce your interest rate and monthly mortgage payment amount, perhaps by a lot. You may also have the ability to "cash out" a portion of the built-up equity in your home, that you can use to take care of higher interest debt, make home improvements, or finance a vacation. You could be able to refinance into a shorter-term mortgage, enabling you to build your home equity quicker.
Expenses and Fees
As you probably expect, you'll have to pay for your process of refinancing. You will be charged the same types of expenses and fees as with your present mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might offer to pay discount points (prepaid interest) to get a lower rate of interest. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the term of the refinanced mortgage loan can be significant. You might be told that points may be tax deductible, but since tax regulations are ever-changing, please speak with a tax professional before depending on this.
Speaking of taxes, once your interest rate is lowered, of course you will also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into account. We can help you do the math! Call us at 9254610500.
Most borrowers find that the savings per month balance out the up-front cost of refinancing. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at 9254610500 to get you started.
Want to know more about refinancing? Call us: 9254610500.