Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That might have been good advice a while back, but with refinancing dropping in cost recently, it is a good time to think about a new mortgage loan! Refinancing your loan has some advantages that can make it worth the up-front expenditure several times over.
When you refinance, you could be able to reduce your interest rate and monthly mortgage payment amount, sometimes significantly. Additionally, you might have the option of pulling out some of the equity in your home by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build your equity quicker.
Expenses and Fees
As you probably know, you'll have some fees and expenses during your process of refinancing. You will pay the same kinds of fees as you did with your existing home loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might consider paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage loan can be substantial. You may have heard that points can be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to consult with your tax professional before considering this in your calculations.
Speaking of taxes, when you lower your interest rate, it follows that you will also be reducing the interest amount that you will be able to deduct on your taxes. This is another expense that borrowers take into consideration. Call us at (904) 342-3622 to help you do the math.
Most borrowers find that the savings per month quickly balance out the initial expenses of refinancing. We'll help you find out what program is perfect for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and how refinancing can effect your taxes. Call us at (904) 342-3622 to get started.
Want to know more about refinancing? Call us at (904) 342-3622.