Weighing the Options of Refinancing
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Ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least 2 points lower than your current one? That might have been accurate years ago, but with the fact that refinancing has been costing less recently, it's a good time to think about a new loan! Refinancing your loan has a variety of advantages that often make it worth the up-front expenditure a few times over.
Benefits
You could be able to lower your interest rate (sometimes substantially) and have smaller monthly payments with a refinanced mortgage loan. You also may be given the option of tapping into the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage program, giving you the ability to build your home equity faster.
Fees and Expenses
As you probably expect, you'll have to pay for your the refinance process. You will have to pay the same types of fees as you did with your existing mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying points can help you attain a lower interest rate. The amount you'll save on the life of the mortgage may be substantial if you've paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on rumors that any paid points can be deducted on your federal income taxes.
Another thing about taxes is that once you lower your interest rate, of course you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at 7072522700.
Most people find that the savings per month balance out the initial cost of a refinance. We can help you figure out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at 7072522700 to get started.
Curious about refinancing? Give us a call at 7072522700.