Weighing the Options of Refinancing
 |
 |
 |
Shopping for a mortgage loan? We'd be thrilled to answer your questions about our many mortgage solutions! Call us at 3038627760. Want to get started? Apply Here.
|
|
|
|
|
Ever hear the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points below your existing rate? That might have been sound advice a while back, but as refinancing has been costing less in recent years, it's never the wrong time to think about a new mortgage loan! Refinancing your mortgage has a number of advantages that often make it worth the up-front cost many times over.
Advantages
You might be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage. You could also have the option to "cash out" some of the built-up equity in your residence, that you may use to take care of higher interest debts, improve your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to add to your equity quicker.
Fees and Expenses
All of these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your original mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying discount points can get you a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the new mortgage loan can be great. We recommend that you consult with a tax professional before acting on rumors that the points paid can be deducted on your taxes.
Another thing about taxes is that once you reduce your interest rate, it follows that you will also be reducing the paid interest amount that you will be able to deduct on your federal income taxes. This is another cost that some borrowers take into account. Call us at 3038627760 to help you do the math.
All things considered, for most people the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 3038627760 to get you started.
Want to know more about refinancing your home? Give us a call: 3038627760.