When is Refinancing Worth it?
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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but since refinance costs have been getting lower, it could be time to look into it. Refinancing your mortgage has a variety of advantages that can make it worth the initial cost many times over.
When you refinance, you might be able to reduce your interest rate and monthly mortgage payment amount, sometimes significantly. You might also have the ability to "cash out" some of the built-up equity in your home, that you are able use to consolidate debts, add on to your home, or take a vacation. With reduced interest rates, you may also be able to build your home equity faster by changing to a shorter term loan.
Fees and Expenses
All these advantages do cost something, though. You'll have the same types of expenses and fees as with your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying points can result in a better interest rate. When you pay (on average) 3% of the mortgage loan amount initially, your savings for the term of the refinanced loan can be significant. You might hear that these points may be tax deductible, but as tax regulations can be ever-changing, we urge you to consult your tax professional before considering this in your calculations.
One more expense that a borrower may take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at (321) 777-7277.
In the end, for most the total of initial costs to refinance will be made up very quickly in savings each month. We will work with you to find out which loan program is right for you, considering your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing will probably have on your taxes. Call us at (321) 777-7277 to get you started.
Want to know more about refinancing your home? Give us a call: (321) 777-7277.