Is Refinancing Worth the Cost?
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Some have said that only when your new interest is at least two points lower, should you refinance your loan. Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it may be time to take a serious look. A refinance is often worth its cost many times over, considering the advantages that can come, as well as a reduced interest rate.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. You could also have the ability to "cash out" a portion of your equity, that you may use to consolidate debts, improve your home, or plan a vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity faster.
Fees and Expenses
All these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you were charged for during your existing mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can help you get a lower interest rate. The money you will save on the life of the mortgage might be significant if you've paid up front about three percent of the new loan total. Please consult a tax professional before acting on hear-say that these paid points can be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is reduced, naturally you'll also be reducing the interest amount that you may deduct on your federal income taxes. This is another expense that borrowers take into account. Call us at 866-300-1550 to help you do the math.
In the end, for most borrowers the total of up-front costs to refinance are paid back very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 866-300-1550 to get started.
Want to know more about refinancing your home? Call us: 866-300-1550.