When is Refinancing Worth it?
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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. That could have been valid a while back, but since refinancing has been costing less over the last few years, it's a good time to explore the options of a new loan! A refinance is often worth its cost several times over, because of the advantages that it brings, in addition to a reduced interest rate.
Benefits
When you refinance, you might have the ability to reduce your interest rate and monthly payment amount, sometimes significantly. Additionally, you may have the option of tapping into the equity in your home by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage, giving you the ability to build your equity faster.
Expenses and Fees
Of course, you will have some fees and expenses during the process of refinancing. With your refinance, you're paying for a lot of the same things you were charged for during your original mortgage loan. These may include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can help you attain a lower interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the term of the refinanced mortgage loan can be significant. Please consult with a tax professional before acting on advice that any points paid may be deducted on your taxes.
Speaking of taxes, if your interest rate is reduced, naturally you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is another expense that some borrowers take into account. Call us at 9254610500 to help you do the math.
Most borrowers find that the savings each month quickly balance out the up-front expenses of a refinance. We'll work with you to determine what mortgage loan program is the best fit for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 9254610500 to get you started.
Want to know more about refinancing your home? Give us a call at 9254610500.