When is Refinancing Worth it?
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In the market for a new mortgage loan? We'll be glad to talk about our many mortgage solutions! Call us at 9043423622. Ready to begin? Apply Online Now.
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Ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points lower than your present one? Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it could be time to look into it. A refinance is often worth its cost several times over, because of the benefits that it brings, as well as a lower interest rate.
Benefits
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage loan. You also could have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced rates, you might also get the chance to build up home equity faster by switching to a shorter-term mortgage loan.
Expenses and Fees
As you probably expect, you will have to pay for the process of refinancing. You'll be charged the same kinds of fees as with your existing mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying discount points can get you a lower interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the term of the new mortgage can be significant. We recommend that you talk to a tax professional before acting on rumors that these paid points may be deducted on your taxes.
Speaking of taxes, once your interest rate is reduced, it follows that you'll 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. Call us at 9043423622 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance will be paid back soon in savings each month. We will work with you to determine which loan program is the ideal fit for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and the effect refinancing will probably have on your taxes. Call us at 9043423622 to get started.
Want to know more about refinancing your home? Give us a call at 9043423622.