Weighing the Options of Refinancing
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Some have said that only when your new interest will be at least two points below your current rate, should you refinance your loan. That could have been accurate a while back, but with refinancing dropping in cost in recent years, it's never the wrong time to explore the options of a new mortgage loan! A refinance may be worth its cost many times over, considering the advantages that may come, as well as a lower interest rate.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with a refinanced loan. You might also have the ability to "cash out" some of the built-up equity in your residence, that you will be able use to consolidate debt, make home improvements, or plan a vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter-term loan.
Expenses and Fees
All of these benefits do come with some expense, though. You will have the same sort of expenses and fees as with your current mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to receive a reduced interest rate. The money you will save on the life of the loan could be substantial if you've paid up front about 3% of the new loan balance. We recommend that you consult a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.
Speaking of taxes, if you lower 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 borrowers take into account. Call us at 9727982110 to help you do the math.
In the end, for most the amount of initial costs to refinance are paid back soon in monthly savings. We'll work with you to find out which program is the best fit for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at 9727982110 to get you started.
Want to know more about refinancing your home? Give us a call: 9727982110.