Weighing the Options of Refinancing
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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. That may have been true years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to think about a new loan! A refinance is often worth its cost several times over, factoring in the advantages that it brings, as well as a reduced interest rate.
Benefits
You might be able to bring down your interest rate (sometimes significantly) and make smaller mortgage payments with your refinanced mortgage. You also may be given the option of tapping into the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build your home equity quicker.
Fees and Expenses
As you probably expect, you will have some fees and expenses during the process of refinancing. You will have the same kinds of expenses and fees as with your present home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could need to pay points (prepaid interest) to gain a better rate of interest. If you pay (on average) three percent of the loan amount initially, the savings for the term of the new mortgage loan can be significant. Please consult with a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.
Another thing about taxes is that if you bring down your interest rate, it follows that you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that borrowers consider. We can help you do the math! Call us at 3038627760.
Ultimately, for most borrowers the amount of up-front costs to refinance are paid back very quickly in monthly savings. We will help you determine what loan program is the ideal fit for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing could have on your taxes. Call us at 3038627760 to get started.
Curious about refinancing? Call us: 3038627760.