Is Refinancing Worth the Cost?
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In the market for a new mortgage? We can help! Call us at 866-300-1550. Want to get started? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points under your existing one? That could have been valid years ago, but with refinancing dropping in cost over the last few years, it's a good time to think about a new mortgage loan! A refinance is often worth its cost many times over, factoring in the benefits that it brings, as well as a lower interest rate.
Advantages
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. You also might be given the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance into a shorter-term mortgage program, enabling you to add to your home equity quicker.
Expenses and Fees
As you probably know, you will have to pay for your the refinance process. When you refinance, you are paying for basically the same things you paid for during your current mortgage. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might investigate paying points to reduce your interest rate. Your savings on the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan balance. You might hear that these points may be deducted on your income taxes, but since tax regulations can be ever-changing, we urge you to consult a tax professional before considering this in your calculations.
Another cost that borrowers might take into account is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. Call us at 866-300-1550 to help you do the math.
Ultimately, for most the total of initial costs to refinance will be made up very quickly in monthly savings. We will work with you to figure out which loan program is right for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing could have on your taxes. Call us at 866-300-1550 to get started.
Curious about refinancing your home? Give us a call: 866-300-1550.