When is Refinancing Worth it?
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In the market for a mortgage? We'll be glad to talk about your mortgage needs! Call us at 3217777277. Ready to begin? Apply Now.
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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. That may have been true a while back, but as refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! A refinanced mortgage loan is often worth its cost many times over, because of the advantages that it brings, as well as a lower interest rate.
Advantages of Refinancing
When you refinance, you could have the ability to lower your interest rate and monthly payment , sometimes significantly. You also may be given the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build up home equity faster by moving to a shorter-term mortgage loan.
Fees and Expenses
All of these advantages do come with some expense, though. You will have to pay the same kinds of expenses and fees as with your present mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You could offer to pay discount points (prepaid interest) to get a lower rate of interest. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the new loan can be substantial. Please consult a tax professional before acting on hear-say that the points paid may be deducted on your federal income taxes.
Another thing about taxes is that when you bring down your interest rate, of course you will also be lowering the interest amount that you can deduct on your taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at 3217777277.
In the end, for most borrowers the total of up-front costs to refinance will be paid back soon in savings each month. We will work with you to determine what loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing could have on your taxes. Call us at 3217777277 to get you started.
Curious about refinancing? Give us a call at 3217777277.