Is Refinancing Worth the Cost?
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It has been said that only if your new interest is at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage loan can be worth its cost several times over, because of the advantages that may come, in addition to a reduced interest rate.
Benefits from Refinancing
You may be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage loan. You also might be given the option of pulling out some of the equity in your home by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With lower interest rates, you may also be able to build up home equity faster by moving to a shorter-term mortgage loan.
The Cost
All these benefits do cost something, though. You will pay the same sort of expenses and fees as you did with your present mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might offer to pay discount points (prepaid interest) to gain a more favorable interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the refinanced mortgage can be great. You may be told that these points can be tax deductible, but since tax regulations can be difficult to keep up with, please consult with a tax professional before making any decisions based on this.
Speaking of taxes, once you lower your interest rate, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is one more expense that some borrowers consider. Call us at 3217777277 to help you do the math.
Most people find that the savings per month balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at 3217777277 to get started.
Want to know more about refinancing? Call us at 3217777277.