Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least two points lower than your present rate? Maybe several years ago that was good advice, but since refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a variety of advantages that will often make it worth the up-front expenditure a few times over.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly payment , perhaps by a lot. You might also have the ability to "cash out" some of the built-up equity in your home, that you may use to consolidate debts, improve your home, or finance a vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to add to your home equity quicker.

Expenses and Fees

Of course, you will have to pay for your process of refinancing. You will pay the same kinds of expenses and fees as with your current home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the new mortgage can be substantial. Please talk to a tax professional before acting on advice that these paid points may be deducted on your taxes.

Another thing about taxes is that when your interest rate is lowered, of course you will also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is one more cost that borrowers consider. Call us at 4078987559 to help you do the math.

All things considered, for most borrowers the amount of initial costs to refinance are made up very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at 4078987559 to get started.

Want to know more about refinancing? Give us a call at 4078987559.


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