When is Refinancing Worth it?
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Looking for a mortgage loan? We can help! Call us at 7072522700. Ready to begin? Apply Now.
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It has been said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. That may have been valid years ago, but with refinancing dropping in cost recently, it's never the wrong time to consider a new mortgage loan! A refinanced loan is often worth its cost many times over, factoring in the benefits that can come, as well as a lower interest rate.
Advantages
You could be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage. Additionally, you could be given the option of tapping into the equity in your house by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. With reduced rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term mortgage.
The Cost
All these advantages do cost something, though. With your refinance, you are paying for basically the same things you paid for during your original mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to attain a better interest rate. The amount you'll save on the life of the loan might be significant if you have paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on advice that any paid points may 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 reducing the interest amount that you will be able to deduct on your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 7072522700.
All things considered, for most the total of initial costs to refinance will be paid back very quickly in savings each month. We'll help you find out which program is the ideal fit for you, looking at your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing may have on your taxes. Call us at 7072522700 to get you started.
Curious about refinancing your home? Give us a call: 7072522700.