When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least two points below your current rate, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage loan! Refinancing has some benefits that often make it worth the initial expenditure many times over.
Advantages
When you refinance, you may be able to lower your interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you might be given the option of tapping into the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter term mortgage loan.
Expenses and Fees
Of course, you will have some fees and expenses during the process of refinancing. With your refinance, you're paying for a lot of the same things you were charged for at the time you got your current 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
Paying discount points can get you a better interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the term of the new mortgage loan can be substantial. You might have heard that the points may be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before considering this in your calculations.
An additional expense that a borrower may consider is that a lower rate of interest will lower the interest amount you will deduct from your taxes. We can help you do the math! Call us at 4078987559.
Most people find that the monthly savings quickly outweigh the initial expenses of a refinance. We'll work with you to figure out what mortgage loan program is the ideal fit for you, taking into account your cash on hand, how likely you are to sell your home in the near future, and how refinancing might effect your taxes. Call us at 4078987559 to get started.
Curious about refinancing? Call us: 4078987559.