Is Refinancing Worth the Cost?
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Shopping for a mortgage? We can assist you! Call us at 3217777277. Ready to get started? Apply Now.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least 2 points below your present rate? That could have been valid years ago, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! Refinancing has a variety of advantages that will often make it worth the up-front expenditure a few times over.
Advantages of Refinancing
You might be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced loan. You might also be able to "cash out" a portion of your home equity, that you can use to consolidate debts, add on to your home, or finance a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to build your home equity quicker.
Fees and Expenses
All these advantages do come with some expense, though. You will have to pay the same sort of fees as you did with your existing mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might offer to pay points (prepaid interest) to get a lower rate of interest. Your savings over the life of the loan may be significant if you've paid up front about 3% of the new loan total. You may have heard that the points may be tax deductible, but since tax regulations can be ever-changing, we urge you to consult a tax professional before considering this in your calculations.
Another thing about taxes is that if your interest rate is reduced, it follows that you will also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers take into consideration. We can help you do the math! Call us at 3217777277.
Ultimately, for most people the total of initial costs to refinance are paid back very quickly in savings each month. We'll work with you to figure out which mortgage program is perfect for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing can effect your taxes. Call us at 3217777277 to get started.
Want to know more about refinancing? Give us a call: 3217777277.