Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it could be time to look into it. Refinancing has a number of advantages that will often make it worth the up-front expenditure many times over.
Benefits
You could be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. You also might be given the option of tapping into 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. You might be able to refinance into a shorter-term mortgage program, giving you the ability to build your home equity quicker.
Expenses and Fees
As you probably expect, you will have some fees and expenses during your the refinance process. When you refinance, you are paying for many of the same things you were charged for during your current mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could need to pay discount points (prepaid interest) to get a more favorable interest rate. The money you will save over the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that these paid points can be deducted on your taxes.
Another thing about taxes is that when you bring down your interest rate, it follows that you'll also be lowering the paid interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers take into account. Call us at 4078987559 to help you do the math.
Most borrowers find that the monthly savings outweigh the up-front expenses of a refinance. We can help you explore your options, 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 your home? Give us a call at 4078987559.