Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points lower than your present rate? That may have been valid a while back, but with the fact that refinancing has been costing less recently, it's never the wrong time to consider a new mortgage! A refinanced mortgage loan is often worth its cost many times over, factoring in the advantages that come, along with a reduced interest rate.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly payment amount, sometimes considerably. You could also have the ability to "cash out" some of your home equity, which you will be able use to consolidate debt, add on to your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity faster.

Expenses and Fees

All these benefits do cost something, though. You will have the same sort of expenses and fees as with your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying discount points can result in a lower interest rate. Your savings on the life of the mortgage could be significant if you've paid up front about three percent of the new loan total. You might have heard that these points can be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to consult with a tax professional before considering this in your calculations.

Another expense that borrowers might consider is that a lower interest rate will reduce the interest amount you'll deduct on your federal income taxes. Call us at 4078987559 to help you do the math.

Ultimately, for most the total of up-front costs to refinance will be paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 4078987559 to get started.

Want to know more about refinancing your home? Give us a call: 4078987559.


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