Is Refinancing Worth the Cost?
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Shopping for a mortgage? We will be glad to assist you! Give us a call today at 9254610500. Ready to get started? Apply Here.
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Ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points lower than your present one? That might have been good advice years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to think about a new mortgage loan! A refinance can be worth its cost many times over, because of the advantages that come, in addition to a reduced interest rate.
Advantages of Refinancing
When you refinance, you might be able to lower the interest rate and monthly payment , sometimes considerably. Additionally, you might have the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build your home equity faster by moving to a shorter-term mortgage.
The Cost
All of these advantages do come with some expense, though. You will be charged the same types of fees as with your present mortgage. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can result in a lower interest rate. If you pay (on average) 3% of the loan amount at the start, your savings for the term of the refinanced mortgage loan can be significant. Please consult a tax professional before acting on rumors that any points paid may be deducted on your taxes.
Another thing about taxes is that when your interest rate is reduced, naturally you will also be lowering the interest amount that you may deduct on your federal income taxes. This is another expense that some borrowers take into consideration. Call us at 9254610500 to help you do the math.
Ultimately, for most people the total of initial costs to refinance will be made up soon in savings each month. We can help you find out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 9254610500 to get started.
Curious about refinancing your home? Call us at 9254610500.