Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least two points below your present rate? That might have been valid years ago, but with refinancing dropping in cost recently, it is never the wrong time to consider a new loan! A refinance is often worth its cost many times over, considering the benefits that can come, in addition to a reduced interest rate.
Advantages
When you refinance, you could be able to reduce the interest rate and mortgage payment , perhaps by a lot. You might also have the option to "cash out" a portion of the built-up equity in your residence, that you can use to take care of higher interest debts, add on to your home, or finance a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage.
Expenses and Fees
Of course, you'll have some fees and expenses during the the refinance process. With your refinance, you are paying for most of the same things you were charged for during your existing mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can result in a lower interest rate. When you pay (on average) 3% of the loan amount up front, the savings for the life of the refinanced mortgage loan can be substantial. Please talk to a tax professional before acting on hear-say that any paid points may be deducted on your taxes.
One more cost that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 866-300-1550.
All things considered, for most borrowers the total of initial costs to refinance are made up very quickly in savings each month. We can help you explore what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 866-300-1550 to get you started.
Want to know more about refinancing? Give us a call at 866-300-1550.