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 lower, should you refinance your loan. Perhaps that was sound advice several years ago, but as refinance costs have been getting lower, it could be time to look into it. Refinancing your mortgage loan has a variety of advantages that often make it worth the initial cost many times over.

Benefits from Refinancing

You might be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced loan. You also might be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also be able to build your home equity more quickly by moving to a shorter-term mortgage.

The Cost

All of these advantages do come with some expense, though. You will have to pay the same types of expenses and fees as you did with your present home loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying points can result in a better 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 balance. We recommend that you consult a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.

Another thing about taxes is that if your interest rate is reduced, naturally you will also be lowering the paid interest amount that you may deduct on your federal income taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 4078987559.

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

Want to know more about refinancing? Call us at 4078987559.


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