Is Refinancing Worth the Cost?
 |
 |
 |
Looking for a mortgage loan? We'll be glad to answer your questions about our many mortgage solutions! Call us at 866-300-1550. Want to get started? Apply Here.
|
|
|
|
|
Ever hear the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least two points below your present one? That might have been true years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to consider a new mortgage loan! A refinance may be worth its cost many times over, because of the advantages that can come, as well as a lower interest rate.
Advantages
When you refinance, you may be able to lower your interest rate and mortgage payment amount, sometimes significantly. You could also have the option to "cash out" some of your equity, that you can use to take care of higher interest debt, make home improvements, or finance a vacation. With lower interest rates, you may also get the chance to build up home equity faster by changing to a shorter term mortgage loan.
The Cost
All these advantages do cost something, though. When you refinance, you are paying for most of the same things you were charged for during your original mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can result in a lower 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 significant. Please consult a tax professional before acting on advice that the paid points may be deducted on your taxes.
Another thing about taxes is that once you bring down your interest rate, naturally you will also be lowering the interest amount that you can deduct from your federal income taxes. This is one more expense that borrowers consider. Call us at 866-300-1550 to help you do the math.
In the end, for most people the total of up-front costs to refinance will be paid back soon in monthly savings. We can help you explore your options, considering the effect a refinance may have on your taxes, whether 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: 866-300-1550.