Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if your new interest rate is at least 2 points below your current rate? That may have been good advice years ago, but with refinancing dropping in cost over the last few years, it's never the wrong time to consider a new mortgage loan! A refinance may be worth its cost many times over, considering the advantages that come, as well as a lower interest rate.
You might be able to lower your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. You could also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to take care of higher interest debt, add on to your home, or take a vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to add to your home equity faster.
Fees and Expenses
All of these benefits do cost something, though. You'll have the same kinds of fees as with your current mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
Paying discount points can result in a lower interest rate. If you pay (on average) 3% of the loan amount initially, your savings for the life of the new mortgage can be substantial. You might hear that points can be tax deductible, but as tax regulations are difficult to keep up with, we urge you to speak with your tax professional before making any decisions based on this.
Another cost that borrowers might consider is that a lower rate of interest 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 total of up-front costs to refinance will be made up soon in monthly savings. We will work with you to figure out what program is right for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing may have on your taxes. Call us at 3038627760 to get started.
Want to know more about refinancing? Give us a call at 3038627760.