Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only refinance if your new interest rate is at least two points below your current rate? Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it may be time to look into it. Refinancing your loan has a number of advantages that will often make it worth the up-front cost a few times over.
Advantages
You may be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced mortgage. You may also have the ability to "cash out" a portion of your home equity, which you can use to take care of higher interest debts, improve your home, or finance a vacation. With reduced interest rates, you might also get the chance to build your home equity faster by switching to a shorter-term loan.
Fees and Expenses
All of these advantages do come with some expense, though. You'll have the same kinds of fees as with your existing home loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can help you attain a lower interest rate. The amount you will save over the life of the loan could be substantial if you have paid up front about three percent of the new loan total. You might be told that points may be tax deductible, but as tax regulations are ever-changing, please consult with your tax professional before depending on this.
Another cost that borrowers may consider is that a lower rate of interest will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at 4078987559.
Ultimately, for most borrowers the amount of up-front costs to refinance are paid back soon in monthly savings. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 4078987559 to get started.
Want to know more about refinancing your home? Call us: 4078987559.