When is Refinancing Worth it?
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In the market for a new mortgage loan? We'd be thrilled to talk about your mortgage needs! Give us a call today at 7072522700. Ready to get started? Apply Here.
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It has been said that only in the case your new interest will be at least two points below your current rate, should you refinance your mortgage. Maybe that was sound advice a number of years ago, but since refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost several times over, considering the advantages that may come, along with a reduced interest rate.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced loan. Additionally, you might be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build up home equity faster by changing to a shorter term mortgage loan.
Fees and Expenses
Of course, you'll have some fees and expenses during the process of refinancing. You'll be charged the same types of expenses and fees as you did with your existing home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You could need to pay points (prepaid interest) to get a lower interest rate. Your savings over the life of the loan could be substantial if you have paid up front about three percent of the new loan total. You may be told that points may be tax deductible, but because tax regulations are difficult to keep up with, we urge you to speak with a tax professional before depending on this.
Another thing about taxes is that when you bring down your interest rate, of course you'll also be lowering the interest amount that you may deduct from your federal income taxes. This is another cost that borrowers take into account. Call us at 7072522700 to help you do the math.
Ultimately, for most people the total of up-front costs to refinance are made up very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the near future, and your money on hand. Call us at 7072522700 to get you started.
Want to know more about refinancing your home? Give us a call at 7072522700.