Is Refinancing Worth the Cost?
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Have you ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your present rate? That may have been sound advice years ago, but since refinancing has been costing less over the last few years, it's never the wrong time to explore the options of a new mortgage loan! Refinancing your loan has a number of advantages that often make it worth the initial expenditure a few times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and monthly payment amount, perhaps significantly. You could also be able to "cash out" a portion of your home equity, which you will be able use to take care of higher interest debt, add on to your home, or finance a vacation. You may have the option to refinance to a shorter-term mortgage, giving you the ability to build your equity faster.
Expenses and Fees
As you probably expect, you'll have to pay for your process of refinancing. When you refinance, you're paying for many of the same things you paid for when you got your current mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying points can result in a lower interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the life of the refinanced mortgage can be great. Please consult with a tax professional before acting on advice that these paid points can be deducted on your taxes.
Speaking of taxes, when you bring down your interest rate, it follows that you will also be lowering the interest amount that you may deduct on your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 7072522700.
Most people find that the savings each month outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at 7072522700 to get started.
Want to know more about refinancing your home? Call us: 7072522700.