Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points lower than your present one? Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced mortgage can be worth its cost many times over, factoring in the benefits that may come, along with a reduced interest rate.
Benefits from Refinancing
You may be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with a refinanced loan. You also may be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage loan, enabling you to build up your equity quicker.
As you probably know, you will have some fees and expenses during the the refinance process. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can get you a lower interest rate. Your savings over the life of the mortgage loan may be significant if you've paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on advice that the points paid may be deducted on your taxes.
Speaking of taxes, once your interest rate is reduced, it follows that you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 877-310-6200.
Most people find that the savings per month balance out the initial cost of refinancing. We will work with you to determine which mortgage program is best for you, considering your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will probably have on your taxes. Call us at 877-310-6200 to get started.
Want to know more about refinancing your home? Call us at 877-310-6200.
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