Weighing the Options of Refinancing
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Ever hear the old rule of thumb that states you should only consider refinancing if the new interest rate will be at least 2 points lower than your existing one? That could have been accurate years ago, but with the fact that refinancing has been costing less recently, it's never the wrong time to think about a new mortgage loan! A refinance is often worth its cost many times over, factoring in the benefits that come, in addition to a lower interest rate.
Advantages of Refinancing
When you refinance, you could be able to lower your interest rate and monthly mortgage payment amount, perhaps by a lot. Additionally, you might have the option of tapping into the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity quicker.
The Cost
As you probably know, you will have some fees and expenses during the process of refinancing. With your refinance, you are paying for most of the same things you paid for at the time you obtained your current mortgage. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might consider paying points to reduce your interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new mortgage can be substantial. You might have heard that these points can be tax deductible, but since tax regulations are ever-changing, we urge you to consult with your tax professional before depending on this.
An additional expense that a borrower may consider is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 9254610500.
In the end, for most borrowers the amount of initial costs to refinance are made up very quickly in monthly savings. We can help you find out what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 9254610500 to get you started.
Curious about refinancing? Call us at 9254610500.