Is Refinancing Worth the Cost?
 |
 |
 |
Shopping for a mortgage loan? We'd be thrilled to answer your questions about our mortgage offerings! Call us at 3038627760. Ready to get started? Apply Now.
|
|
|
|
|
Some have said that only in the case your new interest will be at least 2 points below your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be a good time to take a serious look. A refinanced mortgage is often worth its cost several times over, factoring in the advantages that may come, along with a reduced interest rate.
Advantages
You might be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced mortgage. You may also be able to "cash out" a portion of your equity, which you are able use to take care of higher interest debt, add on to your home, or take a vacation. With lower interest rates, you might also be able to build your home equity more quickly by moving to a shorter term loan.
The Cost
All of these advantages do cost something, though. You'll pay the same types of expenses and fees as you did with your current mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might offer to pay points (prepaid interest) to attain a better interest rate. If you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced mortgage can be substantial. You might hear that these points can be deducted on your income taxes, but because tax regulations can be ever-changing, please consult your tax professional before making any decisions based on this.
An additional expense that a borrower may consider is that a lower interest rate will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 3038627760.
In the end, for most borrowers the amount of initial costs to refinance are made up very quickly in monthly savings. We'll help you find out which program is the best fit for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at 3038627760 to get you started.
Want to know more about refinancing your home? Call us at 3038627760.