When is Refinancing Worth it?
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Some have said that only if your new interest will be at least two points below your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but as refinance costs have been getting lower, it may be time to look into it. A refinanced loan is often worth its cost several times over, because of the benefits that it brings, along with a lower interest rate.
Benefits from Refinancing
When you refinance, you might be able to reduce the interest rate and monthly mortgage payment , sometimes by a lot. You may also be able to "cash out" some of your equity, that you are able use to take care of higher interest debts, add on to your home, or finance a vacation. You may have the option to refinance to a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Expenses and Fees
Of course, you will have to pay for your the refinance process. You will pay the same sort of expenses and fees as you did with your current mortgage. These can include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might need to pay discount points (prepaid interest) to attain a better rate of interest. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the refinanced loan can be great. We recommend that you consult a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.
Speaking of taxes, if your interest rate is lowered, of course you will also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is one more expense that borrowers take into account. Call us at 7068605514 to help you do the math.
Most borrowers find that the monthly savings outweigh the up-front cost of a refinance. We will work with you to find out what program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing could have on your taxes. Call us at 7068605514 to get you started.
Want to know more about refinancing? Call us at 7068605514.