When is Refinancing Worth it?
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In the market for a mortgage? We'll be glad to talk about your mortgage needs! Give us a call at 7072522700. Want to get started? Apply Now.
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least two points below your current rate? Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it could be time to take a serious look. Refinancing your loan has some advantages that often make it worth the initial cost several times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and monthly payment amount, perhaps significantly. You might also be able to "cash out" some of the built-up equity in your home, which you can use to take care of higher interest debts, add on to your home, or take a vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by switching to a shorter-term mortgage.
The Cost
All of these advantages do cost something, though. You will have the same types of fees as with your current mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might need to pay discount points (prepaid interest) to get a more favorable rate of interest. The money you will save on the life of the mortgage loan may be significant if you have paid up front about 3% of the new loan total. Please consult a tax professional before acting on rumors that any paid points can be deducted on your taxes.
Another expense that borrowers may take into account is that a lower interest rate will reduce the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 7072522700.
Most borrowers find that the savings per month outweigh the initial cost of a refinance. We will work with you to determine which program is ideal for you, looking at your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will have on your taxes. Call us at 7072522700 to get started.
Want to know more about refinancing your home? Call us: 7072522700.