Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least 2 points under your present rate? That may have been good advice a while back, but with the fact that refinancing has been costing less in recent years, it's never the wrong time to explore the options of a new mortgage! Refinancing has various advantages that can make it worth the up-front expenditure many times over.
You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage loan. You also might be given the option of pulling out some of the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance into a shorter-term mortgage, enabling you to build up your equity quicker.
Fees and Expenses
As you probably know, you will have to pay for the the refinance process. With your refinance, you're paying for basically the same things you paid for during your original mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can get you a better interest rate. When you pay (on average) 3% of the loan amount up front, your savings for the term of the refinanced loan can be significant. Please consult with a tax professional before acting on rumors that any points paid can be deducted on your federal income taxes.
An additional cost that a borrower might consider is that a reduced rate of interest will lower the interest amount you will be able to deduct on your taxes. Call us at 3038627760 to help you do the math.
Most people find that the monthly savings quickly balance out the up-front expenses of refinancing. We'll work with you to determine what program is ideal for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and how refinancing could effect your taxes. Call us at 3038627760 to get started.
Curious about refinancing? Give us a call: 3038627760.