Is Refinancing Worth the Cost?
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least 2 points under your present rate? That could have been valid years ago, but as refinancing has been costing less recently, it's never the wrong time to consider a new mortgage loan! A refinanced mortgage loan is often worth its cost many times over, considering the advantages that may come, in addition to a lower interest rate.
Advantages of Refinancing
When you refinance, you might be able to reduce the interest rate and monthly mortgage payment amount, perhaps significantly. You might also have the ability to "cash out" some of your equity, that you will be able use to take care of higher interest debt, improve your home, or finance a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to add to your equity quicker.
The Cost
Of course, you will have some fees and expenses during the process of refinancing. When you refinance, you are paying for a lot of the same things you were charged for when you obtained your original mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to receive a reduced interest rate. The money you will save over the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on rumors that these points paid may be deducted on your federal income taxes.
Speaking of taxes, if you lower your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that some borrowers consider. Call us at 3032282254 to help you do the math.
Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 3032282254 to get you started.
Curious about refinancing your home? Give us a call at 3032282254.