Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points lower, should you refinance your mortgage. Maybe several years ago that was good advice, but as refinance costs have been falling recently, it could be time to take a serious look. Refinancing your mortgage has some benefits that often make it worth the up-front cost a few times over.
You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. You might also be able to "cash out" a portion of your equity, that you are able use to consolidate debt, improve your home, or plan a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.
Expenses and Fees
All of these advantages do cost something, though. With your refinance, you're paying for basically the same things you were charged for during your original mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying points can get you a lower interest rate. The money you will save over the life of the loan might be substantial if you've paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on advice that any paid points can be deducted on your taxes.
Speaking of taxes, if your interest rate is reduced, it follows that you'll also be lowering the paid interest amount that you will be able to deduct from your federal income taxes. This is another expense that borrowers take into account. Call us at (816) 525-8000 & (81 to help you do the math.
Most borrowers find that the savings per month outweigh the up-front cost of refinancing. We will help you find out which program is right for you, looking at your cash on hand, how likely you are to sell your home in the next few years, and what effect refinancing may have on your taxes. Call us at (816) 525-8000 & (81 to get started.
Curious about refinancing? Give us a call: (816) 525-8000 & (81.
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