Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points lower, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost over the last few years, it is a good time to consider a new loan! A refinance can be worth its cost many times over, because of the benefits that it brings, along with a lower interest rate.
Benefits from Refinancing
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps considerably. You also might be given the option of pulling out some of the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance to a shorter-term mortgage loan, giving you the ability to build up your equity faster.
Fees and Expenses
All of these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for during your original mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can result in a lower interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the new mortgage can be great. You may have heard that points can be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please speak with your tax professional before considering this in your calculations.
Another expense that borrowers might take into account is that a lower interest rate will lower the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 866-300-1550.
Most people find that the monthly savings quickly balance out the initial expenses of refinancing. We will work with you to figure out what loan program is ideal for you, considering your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing will have on your taxes. Call us at 866-300-1550 to get started.
Curious about refinancing your home? Call us: 866-300-1550.