Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage has a number of benefits that will often make it worth the initial expenditure many times over.
Benefits
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage. You may also have the ability to "cash out" a portion of the built-up equity in your home, that you can use to consolidate debts, make home improvements, or plan a vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to build up your equity faster.
Fees and Expenses
As you probably expect, you'll have to pay for the process of refinancing. With your refinance, you are paying for most of the same things you paid for when you got your original mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might investigate paying points to receive a lower interest rate. Your savings over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on advice that these points paid can be deducted on your taxes.
An additional cost that borrowers might take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at (707) 252-2700.
All things considered, for most borrowers the total of up-front costs to refinance are made up very quickly in monthly savings. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (707) 252-2700 to get you started.
Curious about refinancing your home? Call us: (707) 252-2700.