Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Maybe several years ago that was good advice, but since refinance costs have been falling recently, it may be time to take a serious look. Refinancing has a variety of advantages that often make it worth the up-front cost many times over.
Advantages
You could be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced mortgage loan. You also could be given the option of pulling out some of the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity faster by moving to a shorter term mortgage.
Fees and Expenses
Of course, you will have to pay for the the refinance process. With your refinance, you're paying for many of the same things you paid for at the time you got your existing mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can result in a better interest rate. Your savings over the life of the loan may be substantial if you've paid up front about 3% of the new loan balance. You may hear that the points can be tax deductible, but because tax regulations can be difficult to keep up with, please consult a tax professional before making any decisions based on this.
One more expense that a borrower may consider is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. Call us at 5122916100 to help you do the math.
In the end, for most the total of initial costs to refinance are paid back soon in savings each month. 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 next couple of years, and your cash on hand. Call us at 5122916100 to get you started.
Curious about refinancing your home? Call us at 5122916100.