When is Refinancing Worth it?
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Shopping for a mortgage? We can assist you! Give us a call today at 8102292820. Ready to get started? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points under your existing rate? Perhaps that was good advice several years ago, but as refinance costs have been falling recently, it may be time to look into it. Refinancing your mortgage has a number of benefits that often make it worth the initial expenditure several times over.
Benefits
You may be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage loan. You might also have the ability to "cash out" some of your home equity, which you are able use to consolidate debt, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to build up your equity quicker.
Expenses and Fees
As you probably know, you will have some fees and expenses during the process of refinancing. When you refinance, you are paying for many of the same things you were charged for during your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might need to pay points (prepaid interest) to get a better rate of interest. If you pay (on average) three percent of the loan amount initially, the savings for the term of the refinanced loan can be great. You might have heard that these points can be tax deductible, but since tax regulations can be ever-changing, please consult with your tax professional before considering this in your calculations.
Another expense that a borrower might consider is that a lower interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 8102292820.
Most people find that the savings each month balance out the initial expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 8102292820 to get you started.
Curious about refinancing your home? Give us a call at 8102292820.