When is Refinancing Worth it?

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Some have said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it may be time to look into it. A refinance is often worth its cost many times over, factoring in the advantages that come, in addition to a lower interest rate.

Advantages

When you refinance, you might have the ability to lower your interest rate and monthly mortgage payment amount, sometimes significantly. You also could have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage loan.

Expenses and Fees

All of these benefits do cost something, though. With your refinance, you are paying for a lot of the same things you were charged for during your original mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

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, the savings for the term of the new mortgage loan can be great. We recommend that you talk to a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.

Speaking of taxes, when you lower your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at 6507631924.

Ultimately, for most the amount of initial costs to refinance will be made up soon in savings each month. We will help you determine what loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing will have on your taxes. Call us at 6507631924 to get started.

Want to know more about refinancing your home? Give us a call at 6507631924.

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Norcal Capital Group, Inc

1369 El Camino Real
Millbrae, CA 94030