Weighing the Options of Refinancing
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It has been said that only when your new interest will be at least two points under your current rate, should you refinance your loan. That might have been good advice a while back, but with refinancing dropping in cost over the last few years, it's a good time to think about a new mortgage! A refinanced mortgage loan may be worth its cost many times over, because of the advantages that it brings, as well as a reduced interest rate.
Advantages
When you refinance, you could be able to lower your interest rate and monthly payment , sometimes by a lot. You may also have the ability to "cash out" some of your equity, which you may use to take care of higher interest debt, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build your home equity faster by moving to a shorter term mortgage.
The Cost
All of these advantages do come with some expense, though. With your refinance, you are paying for basically the same things you paid for at the time you obtained your original mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying points can get you a better interest rate. Your savings on the life of the loan could be significant if you have paid up front about three percent of the new loan total. You may be told that the points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to consult a tax professional before making any decisions based on this.
An additional expense that borrowers may take into account is that a reduced rate of interest will lower the interest amount you will deduct on your taxes. We can help you do the math! Call us at (707) 252-2700.
Ultimately, for most the total of initial costs to refinance will be paid back soon in monthly savings. We will work with you to find out what mortgage loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing can effect your taxes. Call us at (707) 252-2700 to get you started.
Curious about refinancing your home? Call us at (707) 252-2700.