Weighing the Options of Refinancing
 |
 |
 |
Looking for a mortgage loan? We will be glad to help! Call us at 3217777277. Ready to get started? Apply Here.
|
|
|
|
|
Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least 2 points under your existing rate? That may have been accurate a while back, but since refinancing has been costing less recently, it is a good time to think about a new loan! A refinanced mortgage is often worth its cost many times over, because of the benefits that may come, in addition to a reduced interest rate.
Advantages
You may be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced loan. You may also be able to "cash out" a portion of the built-up equity in your residence, which you can use to take care of higher interest debts, add on to your home, or finance a vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to add to your home equity quicker.
Fees and Expenses
All these advantages do cost something, though. You will have the same sort of expenses and fees as you did with your existing home loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might need to pay discount points (prepaid interest) to gain a more favorable rate of interest. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the refinanced loan can be significant. Please consult a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Speaking of taxes, once you reduce your interest rate, it follows that you will also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is another expense that borrowers take into account. Call us at 3217777277 to help you do the math.
Most people find that the monthly savings balance out the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 3217777277 to get started.
Want to know more about refinancing? Call us: 3217777277.