Is Refinancing Worth the Cost?
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Are you looking for a new mortgage? We'd be thrilled to answer your questions about our many mortgage solutions! Call us at 3038627760. Want to get started? Apply Now.
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points under your existing rate? Maybe that was sound advice a number of years ago, but as refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a number of benefits that can make it worth the up-front expenditure several times over.
Advantages
You might be able to bring down 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 tapping into the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. With lower rates, you may also be able to build your home equity faster by moving to a shorter term mortgage.
The Cost
Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you are paying for most of the same things you were charged for during your current mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
You might need to pay discount points (prepaid interest) to attain a more favorable rate of interest. The money you will save on the life of the mortgage might be substantial if you have paid up front about 3% of the new loan balance. Please consult a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.
An additional cost that a borrower may consider is that a reduced interest rate will reduce the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at 3038627760.
All things considered, for most people the amount of up-front costs to refinance are paid back very quickly in savings each month. We'll work with you to figure out what program is perfect for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing may effect your taxes. Call us at 3038627760 to get started.
Want to know more about refinancing your home? Give us a call: 3038627760.