Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least 2 points lower, should you refinance your loan. That might have been accurate a while back, but as refinancing has been costing less recently, it's never the wrong time to consider a new mortgage loan! A refinance is often worth its cost several times over, factoring in the benefits that can come, in addition to a lower interest rate.
When you refinance, you might have the ability to reduce the interest rate and mortgage payment , sometimes considerably. You could also have the ability to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debts, make home improvements, or plan a vacation. With reduced rates, you might also get the chance to build up home equity more quickly by changing to a shorter term mortgage.
All these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for at the time you got your existing mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can help you get a lower 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 great. We recommend that you consult with a tax professional before acting on hear-say that the points paid can be deducted on your federal income taxes.
One more cost that borrowers might take into account is that a reduced interest rate will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at (321) 777-7277.
Most borrowers find that the savings each month balance out the initial cost of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (321) 777-7277 to get started.
Want to know more about refinancing your home? Call us: (321) 777-7277.