Weighing the Options of Refinancing
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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 loan. That might have been accurate years ago, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage loan! Refinancing has various benefits that will often make it worth the up-front expenditure many times over.
When you refinance, you could have the ability to reduce the interest rate and monthly payment , sometimes considerably. Additionally, you might have the option of pulling out some of the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter term mortgage.
Expenses and Fees
As you probably know, you will have some fees and expenses during your process of refinancing. When you refinance, you are paying for basically the same things you paid for during your existing mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
You could need to pay points (prepaid interest) to gain a better interest rate. The money you'll save on the life of the loan could be significant if you've paid up front about 3% of the new loan total. You may be told that the points can be tax deductible, but because tax regulations can be ever-changing, we urge you to speak with a tax professional before making any decisions based on this.
Another expense that a borrower may consider is that a lower rate of interest will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at (650) 689-5684.
In the end, for most the amount of initial costs to refinance will be paid back very quickly in monthly savings. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at (650) 689-5684 to get started.
Want to know more about refinancing? Give us a call at (650) 689-5684.