Is Refinancing Worth the Cost?
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Are you looking for a mortgage loan? We can help! Call us at 866-300-1550. Want to get started? Apply Online Now.
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Ever heard the old rule of thumb that says you should only refinance if your new interest rate is at least 2 points under your current rate? Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be a good time to take a serious look. A refinanced mortgage is often worth its cost several times over, considering the advantages that come, along with a reduced interest rate.
Advantages
When you refinance, you could be able to lower your interest rate and monthly mortgage payment , perhaps by a lot. You might also have the option to "cash out" some of the built-up equity in your home, which you can use to take care of higher interest debt, improve your home, or plan a vacation. You could be able to refinance into a shorter-term mortgage loan, enabling you to build your home equity faster.
The Cost
All of these advantages do cost something, though. You'll have the same types of fees as you did with your current mortgage. Included in the list 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. If you pay (on average) 3% of the loan amount at the start, the savings for the term of the new mortgage loan can be great. You might be told that these points may be deducted on your income taxes, but since tax regulations are ever-changing, please consult with your tax professional before considering this in your calculations.
Another expense that a borrower may consider is that a reduced interest rate will reduce the interest amount you will be able to deduct from your taxes. Call us at 866-300-1550 to help you do the math.
All things considered, for most borrowers the total of up-front costs to refinance will be made up soon in savings each month. We will help you figure out what mortgage program is right for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing will probably have on your taxes. Call us at 866-300-1550 to get started.
Curious about refinancing your home? Give us a call: 866-300-1550.