Is Refinancing Worth the Cost?
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Shopping for a mortgage? We can assist you! Call us at 2148657442. Ready to get started? Apply Online Now.
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It has been said that only when your new interest will be at least two points below your current rate, should you refinance your mortgage. That may have been valid a while back, but since refinancing has been costing less recently, it is never the wrong time to explore the options of a new loan! A refinanced mortgage loan can be worth its cost many times over, because of the advantages that it brings, in addition to a lower interest rate.
Benefits from Refinancing
You might be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced mortgage loan. Additionally, you could be given the option of tapping into the equity in your house by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term mortgage.
Fees and Expenses
All these benefits do cost something, though. With your refinance, you're paying for basically the same things you were charged for at the time you got your original 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 could need to pay points (prepaid interest) to get a more favorable rate of interest. If you pay (on average) three percent of the loan amount initially, your savings for the term of the new mortgage can be great. You may be told that these points can be tax deductible, but since tax regulations can be difficult to keep up with, please speak with a tax professional before considering this in your calculations.
Another cost that a borrower might consider is that a lower interest rate will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 2148657442.
Most borrowers find that the savings each month outweigh the up-front expenses of a refinance. We can help you explore what your options are, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 2148657442 to get you started.
Curious about refinancing your home? Call us: 2148657442.