When is Refinancing Worth it?
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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 may have been valid a while back, but as refinancing has been costing less in recent years, it's a good time to explore the options of a new mortgage loan! A refinanced loan may be worth its cost several times over, because of the benefits that come, in addition to a reduced interest rate.
When you refinance, you may be able to lower the interest rate and monthly payment amount, sometimes significantly. You could also have the ability to "cash out" some of the built-up equity in your residence, that you will be able use to consolidate debts, add on to your home, or plan a vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to build your home equity quicker.
Fees and Expenses
All these advantages do come with some expense, though. You'll have to pay the same sort of fees as with your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to reduce your interest rate. Your savings on the life of the mortgage could be significant if you've paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on advice that these paid points may be deducted on your taxes.
Speaking of taxes, once your interest rate is reduced, 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. Call us at 9727982110 to help you do the math.
Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We will work with you to find out which mortgage program is ideal for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing might effect your taxes. Call us at 9727982110 to get you started.
Curious about refinancing? Call us at 9727982110.