Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest will be at least 2 points lower, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new loan! Refinancing your loan has a number of benefits that can make it worth the up-front expenditure a few times over.
Benefits from Refinancing
You might be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced loan. You also might have the option of pulling out some of your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to build your home equity faster.
Of course, you'll have to pay for your process of refinancing. When you refinance, you're paying for basically the same things you were charged for when you obtained your existing mortgage. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might need to pay points (prepaid interest) to get a better interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the new loan can be great. We recommend that you consult with a tax professional before acting on advice that any paid points may be deducted on your taxes.
Speaking of taxes, once you reduce your interest rate, it follows that you will also be reducing the interest amount that you'll be able to deduct on your taxes. This is one more cost that some borrowers take into account. Call us at 9727982110 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be made up very quickly in monthly savings. We'll work with you to determine which loan program is right for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing will effect your taxes. Call us at 9727982110 to get started.
Want to know more about refinancing? Give us a call at 9727982110.