When is Refinancing Worth it?
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It has been said that only if your new interest will be at least two points lower, should you refinance your mortgage. That might have been good advice years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new mortgage loan! A refinanced mortgage loan is often worth its cost several times over, because of the advantages that it brings, in addition to a reduced interest rate.
Benefits
When you refinance, you may be able to lower your interest rate and mortgage payment amount, perhaps considerably. You also may have the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage program, enabling you to add to your home equity faster.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during your process of refinancing. You'll pay the same types of fees as you did with your existing home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might investigate paying points to receive a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be significant. You might hear that these points may be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before considering this in your calculations.
Another thing about taxes is that when your interest rate is lowered, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 6507631924.
All things considered, for most the total of up-front costs to refinance will be made up soon in monthly savings. We can help you explore your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 6507631924 to get started.
Want to know more about refinancing your home? Give us a call: 6507631924.