Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate will be at least two points under your present rate? Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. A refinance is often worth its cost several times over, factoring in the advantages that may come, as well as a lower interest rate.
Benefits from Refinancing
When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment , sometimes considerably. You also may be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance into a shorter-term mortgage, giving you the ability to build up your home equity faster.
The Cost
Of course, you will have some fees and expenses during the the refinance process. When you refinance, you're paying for basically the same things you were charged for during your current mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You might look into paying points to reduce your interest rate. When you pay (on average) three percent of the loan amount at the start, your savings for the term of the refinanced loan can be significant. Please consult with a tax professional before acting on advice that any paid points can be deducted on your federal income taxes.
Speaking of taxes, once your interest rate is reduced, naturally you'll also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is another cost that some borrowers take into consideration. Call us at 3217777277 to help you do the math.
All things considered, for most the total of up-front costs to refinance are made up very quickly in savings each month. We'll work with you to figure out what mortgage loan program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 3217777277 to get you started.
Want to know more about refinancing? Call us: 3217777277.