Is Refinancing Worth the Cost?
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Are you looking for a mortgage loan? We'd be thrilled to answer your questions about our many mortgage solutions! Call us at 7072522700. Want to get started? Apply Online Now.
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points lower than your current rate? Maybe several years ago that was good advice, but since refinance costs have been falling recently, it may be a good time to look into it. A refinanced mortgage is often worth its cost many times over, factoring in the advantages that come, along with a lower interest rate.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. You might also be able to "cash out" a portion of your equity, which you may use to take care of higher interest debts, improve your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.
Expenses and Fees
All these advantages do cost something, though. You'll have the same types of fees as you did with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a lower rate of interest. Your savings on the life of the mortgage might be significant if you have paid up front about 3% of the new loan balance. You may be told that points can be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to consult your tax professional before considering this in your calculations.
One more expense that borrowers may take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your taxes. Call us at 7072522700 to help you do the math.
Most people find that the savings per month quickly balance out the initial expenses of refinancing. We can help you find out what your options are, considering the effect a refinance could 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 you started.
Curious about refinancing? Call us: 7072522700.