When is Refinancing Worth it?
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Some have said that only if your new interest is at least two points lower, should you refinance your mortgage. That might have been valid a while back, but as refinancing has been costing less recently, it is a good time to consider a new mortgage loan! A refinanced loan can be worth its cost several times over, because of the benefits that it brings, along with a reduced interest rate.
Advantages
You might be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with a refinanced mortgage loan. You also could be given the option of pulling out some of your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to add to your equity faster.
Expenses and Fees
All these benefits do cost something, though. You'll have the same sort of fees as you did with your existing home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a better interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the refinanced loan can be significant. You may hear that the points can be deducted on your income taxes, but since tax regulations can be ever-changing, please consult your tax professional before making any decisions based on this.
Speaking of taxes, when you bring down your interest rate, it follows that you will also be lowering the paid interest amount that you may deduct on your taxes. This is another cost that some borrowers take into account. Call us at 7068605514 to help you do the math.
Ultimately, for most the total of up-front costs to refinance will be made up soon in savings each month. We can help you figure out what your options are, considering the effect a refinance may 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 started.
Want to know more about refinancing your home? Call us: 7068605514.