Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least two points lower, should you refinance your mortgage. That could have been sound advice years ago, but with the fact that refinancing has been costing less recently, it is never the wrong time to consider a new mortgage! A refinance is often worth its cost several times over, because of the benefits that it brings, along with a lower interest rate.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced mortgage. You could also have the ability to "cash out" some of your home equity, that you can use to consolidate debt, add on to your home, or take a vacation. You might be able to refinance into a shorter-term mortgage program, enabling you to build your home equity quicker.
The Cost
All these benefits do come with some expense, though. With your refinance, you are paying for most of the same things you paid for during your current mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might consider paying points to receive a reduced interest rate. If you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the refinanced mortgage loan can be significant. Please consult a tax professional before acting on rumors that these paid points can be deducted on your taxes.
Speaking of taxes, when you reduce your interest rate, of course you will also be lowering the paid interest amount that you will be able to deduct on your federal income taxes. This is one more cost that some borrowers consider. Call us at 9018401400 to help you do the math.
Most borrowers find that the monthly savings quickly balance out the up-front expenses of a refinance. We'll help you determine what loan program is perfect for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing might effect your taxes. Call us at 9018401400 to get you started.
Want to know more about refinancing your home? Call us at 9018401400.