Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest is at least two points lower, should you refinance your loan. That could have been sound advice a while back, but with the fact that refinancing has been costing less over the last few years, it's never the wrong time to explore the options of a new loan! A refinance can be worth its cost many times over, considering the advantages that it brings, along with a reduced interest rate.
Benefits from Refinancing
When you refinance, you might be able to lower the interest rate and monthly mortgage payment , perhaps considerably. You may also have the ability to "cash out" some of the built-up equity in your home, which you may use to consolidate debts, make home improvements, or take a vacation. You could have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your equity quicker.
Fees and Expenses
All these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you were charged for at the time you got your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a better rate of interest. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the new mortgage can be great. We recommend that you talk to a tax professional before acting on rumors that any points paid may be deducted on your federal income taxes.
Another cost that a borrower may take into account is that a lower interest rate will lower the interest amount you'll deduct from your taxes. Call us at 866-300-1550 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be made up soon in monthly savings. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 866-300-1550 to get you started.
Want to know more about refinancing? Give us a call: 866-300-1550.