When is Refinancing Worth it?
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Maybe that was sound advice several years ago, but as refinance costs have been getting lower, it may be time to look into it. A refinance is often worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.
Advantages
You may be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced loan. You also may be given the option of pulling out some of the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your equity faster.
Expenses and Fees
Of course, you'll have some fees and expenses during your process of refinancing. You will pay the same types of expenses and fees as you did with your present mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might look into paying points to reduce your interest rate. Your savings over the life of the mortgage might be substantial if you have paid up front about 3% of the new loan total. You might hear that points may be tax deductible, but as tax regulations are ever-changing, please speak with your tax professional before considering this in your calculations.
Speaking of taxes, if your interest rate is lowered, of course you'll also be reducing the paid interest amount that you may deduct on your taxes. This is another expense that borrowers take into account. Call us at 9254610500 to help you do the math.
Most people find that the savings each month quickly outweigh the up-front expenses of a refinance. We will work with you to find out which mortgage loan program is right for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing might have on your taxes. Call us at 9254610500 to get started.
Curious about refinancing your home? Call us at 9254610500.