When is Refinancing Worth it?
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In the market for a mortgage? We will be glad to help! Give us a call today at 866-300-1550. Ready to begin? Apply Here.
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Ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points lower than your present rate? Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to take a serious look. A refinanced mortgage is often worth its cost several times over, factoring in the benefits that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
You might be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced loan. You also could have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to build up your equity quicker.
The Cost
All these advantages do come with some expense, though. With your refinance, you are paying for a lot of the same things you were charged for during your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to be given a lower interest rate. The money you'll save on the life of the mortgage loan might be significant if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that any paid points may be deducted on your federal income taxes.
Another expense that borrowers might consider is that a reduced rate of interest will reduce the interest amount you will deduct on your federal income taxes. Call us at 866-300-1550 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance will be paid back soon in savings each month. We will work with you to find out what loan program is right for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing may have on your taxes. Call us at 866-300-1550 to get started.
Want to know more about refinancing your home? Give us a call: 866-300-1550.