Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least 2 points under your current rate, should you refinance your loan. That might have been good advice a while back, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage loan! Refinancing has a number of benefits that often make it worth the initial expenditure several times over.

Benefits

When you refinance, you might have the ability to reduce the interest rate and monthly mortgage payment , sometimes significantly. Additionally, you might have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage, enabling you to build up your equity quicker.

The Cost

All of these benefits do cost something, though. You'll pay the same sort of expenses and fees as you did with your existing home loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might investigate paying points to be given a better interest rate. Your savings on the life of the mortgage could be significant if you've paid up front about 3% of the new loan total. You might be told that these points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please consult with a tax professional before depending on this.

One more expense that borrowers may take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. Call us at 877-310-6200 to help you do the math.

Most people find that the savings per month quickly balance out the up-front expenses of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 877-310-6200 to get started.

Curious about refinancing your home? Give us a call: 877-310-6200.

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