Is Refinancing Worth the Cost?
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In the market for a new mortgage loan? We'd be thrilled to discuss our many mortgage solutions! Give us a call today at 4078987559. Ready to get started? Apply Online Now.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points below your present rate? Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing has some advantages that often make it worth the initial expenditure several times over.
Advantages
You could be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced loan. You could also have the option to "cash out" some of the built-up equity in your home, that you may use to consolidate debts, add on to your home, or finance a vacation. With reduced interest rates, you might also be able to build your home equity faster by switching to a shorter term mortgage.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during the process of refinancing. You'll be charged the same kinds of fees as with your current mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can get you a better interest rate. The money you will save on the life of the mortgage could be significant if you've paid up front about three percent of the new loan balance. You might be told that points may be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to consult with your tax professional before depending on this.
Speaking of taxes, once your interest rate is reduced, naturally you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at 4078987559 to help you do the math.
Ultimately, for most borrowers the amount of initial costs to refinance will be paid back soon in monthly savings. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 4078987559 to get you started.
Curious about refinancing? Give us a call: 4078987559.