Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only refinance if your new interest rate is at least two points below your current one? Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it could be time to take a serious look. A refinance can be worth its cost many times over, considering the advantages that come, along with a lower interest rate.
Benefits
You may be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced loan. You might also be able to "cash out" a portion of your equity, that you may use to take care of higher interest debts, make home improvements, or finance a vacation. With lower interest rates, you may also get the chance to build up home equity more quickly by switching to a shorter-term mortgage loan.
The Cost
As you probably know, you will have to pay for your process of refinancing. You will be charged the same kinds of fees as you did with your existing mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can result in a better interest rate. The amount you'll save over the life of the loan might be significant if you have paid up front about 3% of the new loan total. You may hear that points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult your tax professional before depending on this.
Speaking of taxes, if your interest rate is lowered, it follows that you'll also be reducing the interest amount that you will be able to deduct on your taxes. This is one more expense that some borrowers consider. Call us at 4693224391 to help you do the math.
In the end, for most borrowers the total of initial costs to refinance are paid back soon in savings each month. We'll help you determine what mortgage loan program is ideal for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing will probably have on your taxes. Call us at 4693224391 to get started.
Want to know more about refinancing your home? Give us a call: 4693224391.