Weighing the Options of Refinancing
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Some have said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be time to look into it. A refinance is often worth its cost many times over, because of the benefits that may come, along with a lower interest rate.
Benefits
You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage. Additionally, you might be given the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to add to your equity quicker.
Fees and Expenses
All these advantages do cost something, though. When you refinance, you are paying for basically the same things you were charged for when you obtained your existing mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might think about paying points to receive a better interest rate. Your savings on the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. You may hear that the points may be tax deductible, but since tax regulations are difficult to keep up with, please consult with a tax professional before depending on this.
An additional expense that a borrower may take into account is that a reduced interest rate will lower the interest amount you'll deduct on your taxes. We can help you do the math! Call us at (321) 777-7277.
Ultimately, for most people the total of up-front costs to refinance are paid back soon in savings each month. We'll work with you to determine what program is the ideal fit for you, taking into account your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing could have on your taxes. Call us at (321) 777-7277 to get you started.
Want to know more about refinancing? Give us a call at (321) 777-7277.