Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that says 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 since refinance costs have been falling recently, it may be a good time to look into it. Refinancing your loan has a variety of benefits that will often make it worth the initial expenditure several times over.
Benefits from Refinancing
You could be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced mortgage. You also could be given the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you may also get the chance to build your home equity faster by switching to a shorter term mortgage loan.
Expenses and Fees
All these benefits do come with some expense, though. You'll have to pay the same kinds of fees as you did with your present mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can get you a lower interest rate. Your savings over the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. Please consult a tax professional before acting on advice that these points paid may be deducted on your taxes.
Speaking of taxes, once your interest rate is lowered, of course you will also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers consider. We can help you do the math! Call us at 7068605514.
Most people find that the monthly savings quickly outweigh the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 7068605514 to get you started.
Want to know more about refinancing? Call us: 7068605514.