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 lower, should you refinance your loan. That may have been valid years ago, but with the fact that refinancing has been costing less in recent years, it is a good time to consider a new mortgage! Refinancing your loan has a number of advantages that can make it worth the initial cost a few times over.

Benefits

When you refinance, you might have the ability to lower your interest rate and monthly payment , sometimes significantly. You also could have the option of tapping into the equity in your property by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to build up your equity quicker.

Expenses and Fees

Of course, you will have to pay for your the refinance process. You will have the same types of fees as you did with your present mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can help you get a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the life of the refinanced loan can be great. You might be told that these points can be deducted on your income taxes, but since tax regulations can be ever-changing, we urge you to speak with your tax professional before depending on this.

Another thing about taxes is that when your interest rate is reduced, of course you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers take into account. Call us at 7072522700 to help you do the math.

Most borrowers find that the savings each month balance out the up-front expenses of refinancing. We will work with you to determine which program is best for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 7072522700 to get you started.

Curious about refinancing? Call us at 7072522700.

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