Is Refinancing Worth the Cost?
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Some have said that only if your new interest is at least 2 points lower, should you refinance your mortgage. That might have been true a while back, but since refinancing has been costing less over the last few years, it's a good time to consider a new mortgage! Refinancing has a variety of benefits that will often make it worth the up-front expenditure several times over.
When you refinance, you may have the ability to reduce your interest rate and monthly payment amount, sometimes considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build up home equity faster by switching to a shorter-term loan.
Expenses and Fees
Of course, you will have to pay for the the refinance process. You will be charged the same types of fees as you did with your existing mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could need to pay discount points (prepaid interest) to attain a better interest rate. If you pay (on average) three percent of the loan amount up front, the savings for the life of the refinanced loan can be significant. Please consult a tax professional before acting on rumors that these paid points can be deducted on your federal income taxes.
One more cost that a borrower might take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct from your federal income taxes. We can help you do the math! Call us at 7068605514.
All things considered, for most the amount of initial costs to refinance are made up soon in monthly savings. We can help you explore what your options are, 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 7068605514 to get started.
Curious about refinancing? Call us at 7068605514.