Is Refinancing Worth the Cost?
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In the market for a new mortgage? We'll be glad to answer your questions about our mortgage offerings! Call us at 7072522700. Want to get started? Apply Now.
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Some have said that only when your new interest is at least two points lower, should you refinance your mortgage. Maybe that was good advice several years ago, but since refinance costs have been falling recently, it could be time to take a serious look. Refinancing has various advantages that often make it worth the up-front expenditure a few times over.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes substantially) and make smaller mortgage payments with a refinanced loan. You may also have the option to "cash out" a portion of the built-up equity in your residence, which you may use to consolidate debt, make home improvements, or finance a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by switching to a shorter-term mortgage.
The Cost
All these benefits do cost something, though. You will pay the same types of fees as with your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You could need to pay points (prepaid interest) to gain a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage loan can be substantial. Please consult a tax professional before acting on rumors that the paid points can be deducted on your federal income taxes.
Another thing about taxes is that once your interest rate is reduced, of course you will also be reducing the interest amount that you can deduct on your federal income taxes. This is another cost that some borrowers consider. Call us at 7072522700 to help you do the math.
Most people find that the savings each month outweigh the up-front cost of refinancing. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 7072522700 to get started.
Curious about refinancing your home? Give us a call: 7072522700.