Is Refinancing Worth the Cost?
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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. That could have been valid a while back, but since refinancing has been costing less over the last few years, it's a good time to explore the options of a new loan! Refinancing has a number of benefits that often make it worth the initial expenditure several times over.
You might be able to bring down your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced loan. You could also be able to "cash out" a portion of your equity, that you are able use to take care of higher interest debts, make home improvements, or plan a vacation. You could have the option to refinance into a shorter-term mortgage loan, enabling you to build your equity quicker.
Expenses and Fees
Of course, you will have to pay for the process of refinancing. You'll have to pay the same kinds of expenses and fees as you did with your existing mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might consider paying points to receive a lower interest rate. The money you will save over the life of the loan could be substantial if you have paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on hear-say that the points paid may be deducted on your federal income taxes.
One more cost that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at (707) 252-2700.
Most people find that the savings each month quickly balance out the initial expenses of refinancing. We will help you determine what loan program is best for you, looking at your cash on hand, the likelihood of selling your house in the near future, and how refinancing might effect your taxes. Call us at (707) 252-2700 to get started.
Want to know more about refinancing? Give us a call: (707) 252-2700.