When is Refinancing Worth it?
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It has been said that only when your new interest is at least two points under your current rate, should you refinance your mortgage. That might have been sound advice a while back, but with the fact that refinancing has been costing less recently, it is a good time to consider a new mortgage loan! Refinancing has a variety of benefits that often make it worth the initial cost several times over.
Benefits
You might be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced mortgage loan. You also might have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your equity quicker.
Expenses and Fees
Of course, you'll have some fees and expenses during the the refinance process. With your refinance, you're paying for most of the same things you paid for when you got your original mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might consider paying points to be given a reduced interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the term of the new mortgage loan can be significant. We recommend that you talk to a tax professional before acting on advice that the points paid may be deducted on your taxes.
Another thing about taxes is that once your interest rate is lowered, of course you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 9254610500.
In the end, for most people the total of initial costs to refinance are made up soon in savings each month. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 9254610500 to get started.
Want to know more about refinancing? Give us a call: 9254610500.