Weighing the Options of Refinancing

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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least two points below your present rate? Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it could be time to look into it. Refinancing has some advantages that can make it worth the up-front cost several times over.

Benefits

You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced loan. You could also be able to "cash out" some of the built-up equity in your home, which you can use to take care of higher interest debts, add on to your home, or plan a vacation. With reduced rates, you might also get the chance to build up home equity faster by moving to a shorter-term mortgage.

The Cost

All these advantages do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for when you obtained your current mortgage. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You might need to pay points (prepaid interest) to gain a lower rate of interest. Your savings on the life of the mortgage could be substantial if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on advice that these points paid may be deducted on your federal income taxes.

Speaking of taxes, when you bring down your interest rate, of course you will also be lowering the interest amount that you will be able to deduct from your federal income taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at (816) 525-8000 & (81.

Ultimately, for most the total of initial costs to refinance are made up soon in monthly savings. We will work with you to determine which mortgage program is perfect for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing could have on your taxes. Call us at (816) 525-8000 & (81 to get started.

Want to know more about refinancing? Give us a call: (816) 525-8000 & (81.

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