Weighing the Options of Refinancing
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. That may have been sound advice a while back, but with refinancing dropping in cost recently, it is never the wrong time to think about a new loan! Refinancing has a variety of benefits that often make it worth the initial expenditure several times over.
When you refinance, you might be able to reduce your interest rate and monthly mortgage payment , sometimes significantly. You might also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debt, improve your home, or plan a vacation. You may be able to refinance into a shorter-term mortgage, enabling you to build your equity quicker.
All of these advantages do cost something, though. With your refinance, you're paying for basically the same things you paid for when you obtained your original mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can get you a better interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the term of the new loan can be great. You may hear that these points can be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult your tax professional before depending on this.
Another thing about taxes is that when you lower your interest rate, of course you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers take into account. Call us at 6507631924 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance will be made up very quickly in monthly savings. We'll help you find out what mortgage program is ideal for you, looking at your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing could have on your taxes. Call us at 6507631924 to get started.
Curious about refinancing your home? Call us: 6507631924.