Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps several years ago that was sage advice, but since refinance costs have been getting lower, it could be time to take a serious look. A refinance can be worth its cost many times over, because of the advantages that may come, as well as a reduced interest rate.
Benefits
You may be able to lower your interest rate (sometimes substantially) and reduce your monthly mortgage payment amount with your refinanced mortgage. You may also have the ability to "cash out" a portion of the built-up equity in your home, which you are able use to take care of higher interest debt, make home improvements, or finance a vacation. You could be able to refinance to a shorter-term mortgage loan, enabling you to build your home equity quicker.
Expenses and Fees
All these benefits do cost something, though. You will pay the same types of fees as you did with your present mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might investigate paying points to reduce your interest rate. The amount you will save over the life of the mortgage might be substantial if you've paid up front about three percent of the new loan total. You might have heard that the points may be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to speak with your tax professional before considering this in your calculations.
Another thing about taxes is that when your interest rate is reduced, of course you will also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers consider. We can help you do the math! Call us at 5122916100.
Most people find that the monthly savings balance out the up-front expenses of a refinance. We can help you find out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 5122916100 to get you started.
Want to know more about refinancing? Call us: 5122916100.