Is Refinancing Worth the Cost?
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Shopping for a mortgage? We can assist you! Give us a call at 2147390569. Want to get started? Apply Now.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points below your current one? That might have been good advice years ago, but as refinancing has been costing less in recent years, it is never the wrong time to explore the options of a new mortgage loan! A refinanced loan is often worth its cost several times over, because of the advantages that it brings, as well as a lower interest rate.
Benefits
You could be able to lower your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced mortgage loan. Additionally, you might be given the option of pulling out some of the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced rates, you may also be able to build your home equity faster by switching to a shorter-term mortgage.
Expenses and Fees
All of these advantages do cost something, though. You will have to pay the same kinds of expenses and fees as with your current mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can help you get a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the refinanced mortgage loan can be substantial. You might have heard that these points can be tax deductible, but as tax regulations are ever-changing, please speak with a tax professional before making decisions based on this.
An additional cost that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will deduct from your federal income taxes. Call us at 2147390569 to help you do the math.
In the end, for most people the amount of up-front costs to refinance are paid back soon in savings each month. We'll work with you to determine what loan program is perfect for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at 2147390569 to get started.
Curious about refinancing? Give us a call: 2147390569.