When is Refinancing Worth it?
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In the market for a new mortgage? We will be glad to assist you! Call us at 3217777277. Ready to get started? Apply Here.
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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your mortgage loan has a number of benefits that will often make it worth the initial cost a few times over.
Benefits
You might be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage loan. You also could have the option of pulling out some of the equity in your home by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity faster.
Expenses and Fees
All these advantages do cost something, though. With your refinance, you're paying for a lot of the same things you were charged for during your existing mortgage loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might need to pay discount points (prepaid interest) to attain a more favorable interest rate. When you pay (on average) three percent of the loan amount at the start, the savings for the term of the new loan can be significant. You might hear that these points may be tax deductible, but since tax regulations are ever-changing, we urge you to consult a tax professional before considering this in your calculations.
Speaking of taxes, if you reduce your interest rate, naturally you'll also be lowering the interest amount that you may deduct on your federal income taxes. This is another expense that some borrowers consider. Call us at 3217777277 to help you do the math.
Ultimately, for most borrowers the amount of initial costs to refinance will be paid back very quickly in monthly savings. We'll work with you to determine which loan program is ideal for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing might have on your taxes. Call us at 3217777277 to get you started.
Curious about refinancing? Give us a call at 3217777277.