Is Refinancing Worth the Cost?
 |
 |
 |
Shopping for a mortgage? We'd be thrilled to talk about our many mortgage solutions! Call us at 5122916100. Want to get started? Apply Here.
|
|
|
|
|
Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least two points below your current one? That may have been true years ago, but with refinancing dropping in cost over the last few years, it's a good time to explore the options of a new mortgage! A refinanced mortgage loan can be worth its cost many times over, because of the benefits that come, as well as a lower interest rate.
Benefits
When you refinance, you may be able to lower the interest rate and monthly mortgage payment , perhaps significantly. You also may be given the option of tapping into the equity in your property by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage loan, enabling you to add to your equity quicker.
Fees and Expenses
All these advantages do cost something, though. With your refinance, you're paying for many of the same things you were charged for when you got your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could need to pay points (prepaid interest) to attain a better rate of interest. When you pay (on average) three percent of the loan amount at the start, your savings for the term of the refinanced mortgage can be great. Please consult with a tax professional before acting on rumors that any points paid can be deducted on your federal income taxes.
Another thing about taxes is that when you reduce your interest rate, naturally you'll also be lowering the paid interest amount that you may deduct on your taxes. This is another cost that some borrowers take into account. Call us at 5122916100 to help you do the math.
Ultimately, for most people the total of up-front costs to refinance are made up very quickly in savings each month. We can help you explore your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 5122916100 to get started.
Curious about refinancing? Call us at 5122916100.