Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate is at least two points below your current rate? That might have been sound advice years ago, but since refinancing has been costing less in recent years, it's a good time to think about a new mortgage! A refinanced mortgage can be worth its cost several times over, considering the benefits that come, as well as a lower interest rate.
Benefits
When you refinance, you may have the ability to reduce the interest rate and mortgage payment amount, perhaps considerably. You also might be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.
Expenses and Fees
Of course, you will have to pay for your the refinance process. With your refinance, you're paying for many of the same things you paid for when you got your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might need to pay discount points (prepaid interest) to get a more favorable interest rate. The money you'll save over the life of the mortgage loan might be substantial if you've paid up front about three percent of the new loan balance. Please talk to a tax professional before acting on rumors that these paid points can be deducted on your taxes.
Another expense that borrowers might take into account is that a lower interest rate will lower the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 866-300-1550.
Most borrowers find that the savings per month quickly outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 866-300-1550 to get started.
Want to know more about refinancing? Give us a call: 866-300-1550.