Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least two points lower, should you refinance your loan. That may have been true years ago, but as refinancing has been costing less in recent years, it is never the wrong time to think about a new mortgage! A refinanced mortgage loan is often worth its cost several times over, factoring in the benefits that come, as well as a reduced interest rate.
When you refinance, you might be able to lower your interest rate and monthly payment , perhaps considerably. Additionally, you may be given the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity more quickly by switching to a shorter term loan.
Fees and Expenses
Of course, you'll have to pay for your the refinance process. You will have to pay the same kinds of expenses and fees as you did with your existing mortgage loan. Included in the list will typically 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. When you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced mortgage can be substantial. You might hear that these points can be tax deductible, but since tax regulations are ever-changing, please consult your tax professional before making decisions based on this.
Another expense that borrowers might consider is that a lower interest rate will reduce the interest amount you will be able to deduct on your taxes. Call us at (707) 252-2700 to help you do the math.
Most borrowers find that the savings each month balance out the up-front expenses of a refinance. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at (707) 252-2700 to get you started.
Want to know more about refinancing your home? Call us: (707) 252-2700.