Weighing the Options of Refinancing
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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe that was sound advice a number of years ago, but as refinance costs have been falling recently, it may be a good time to look into it. A refinanced loan may be worth its cost several times over, considering the advantages that come, in addition to a lower interest rate.
Advantages
When you refinance, you may have the ability to reduce your interest rate and monthly payment , perhaps considerably. Additionally, you might be given the option of tapping into the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also get the chance to build your home equity faster by switching to a shorter term mortgage loan.
Fees and Expenses
All of these benefits do come with some expense, though. You'll pay the same types of expenses and fees as you did with your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying discount points can help you attain a lower interest rate. The amount you'll save on the life of the loan may be significant if you've paid up front about three percent of the new loan total. You might hear that the points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before making decisions based on this.
One more expense that a borrower might take into account is that a lower interest rate will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at (707) 252-2700.
All things considered, for most people the amount of initial costs to refinance are paid back soon in monthly savings. We'll help you determine what mortgage program is best for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will probably have on your taxes. Call us at (707) 252-2700 to get you started.
Want to know more about refinancing? Give us a call at (707) 252-2700.