Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least two points lower, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost in recent years, it is a good time to explore the options of a new loan! Refinancing has some advantages that often make it worth the up-front cost a few times over.
Advantages of Refinancing
When you refinance, you could be able to lower your interest rate and monthly payment amount, perhaps considerably. You also could have the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also be able to build up home equity more quickly by changing to a shorter term mortgage.
The Cost
As you probably know, you'll have to pay for your process of refinancing. You'll pay the same kinds of expenses and fees as you did with your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can result in a better interest rate. Your savings over the life of the loan might be significant if you have paid up front about three percent of the new loan total. You may have heard that these points may be tax deductible, but since tax regulations can be ever-changing, we urge you to consult with your tax professional before depending on this.
An additional cost that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 4078987559.
Ultimately, for most people the amount of initial costs to refinance will be paid back soon in savings each month. We'll help you determine what mortgage loan program is right for you, taking into account your cash on hand, how likely you are to sell your residence in the near future, and how refinancing will effect your taxes. Call us at 4078987559 to get you started.
Want to know more about refinancing? Call us at 4078987559.