Is Refinancing Worth the Cost?
 |
 |
 |
In the market for a new mortgage loan? We can help! Give us a call today at 5122916100. Ready to get started? Apply Here.
|
|
|
|
|
It has been said that only if your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage has various benefits that can make it worth the up-front cost many times over.
Benefits from Refinancing
When you refinance, you might be able to lower the interest rate and monthly mortgage payment , sometimes significantly. You also might be given the option of pulling out some of the equity in your home by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by switching to a shorter term loan.
Fees and Expenses
As you probably know, you will have some fees and expenses during the process of refinancing. When you refinance, you're paying for basically the same things you were charged for when you got your original mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might offer to pay discount points (prepaid interest) to gain a lower interest rate. Your savings on the life of the mortgage might be significant if you've paid up front about 3% of the new loan balance. You may be told that points can be deducted on your income taxes, but because tax regulations are difficult to keep up with, we urge you to consult with your tax professional before considering this in your calculations.
Another thing about taxes is that when you lower your interest rate, it follows that you'll also be reducing the paid interest amount that you can deduct from your federal income taxes. This is one more cost that borrowers take into consideration. Call us at 5122916100 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 5122916100 to get you started.
Want to know more about refinancing? Give us a call at 5122916100.