When is Refinancing Worth it?

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Some have said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. That could have been valid years ago, but with refinancing dropping in cost recently, it is a good time to consider a new mortgage loan! A refinanced mortgage loan is often worth its cost several times over, factoring in the benefits that come, along with a lower interest rate.

Advantages

You may be able to bring down your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with your refinanced mortgage loan. You could also have the option to "cash out" a portion of the built-up equity in your home, which you are able use to consolidate debt, improve your home, or plan a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to add to your equity quicker.

Expenses and Fees

All of these advantages do come with some expense, though. With your refinance, you're paying for most of the same things you paid for at the time you got your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might look into paying points to reduce your interest rate. The money you'll save over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan total. You might have heard that these points can be tax deductible, but since tax regulations can be ever-changing, we urge you to consult with a tax professional before making decisions based on this.

Another thing about taxes is that once you reduce your interest rate, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another cost that borrowers take into account. Call us at (816) 525-8000 & (81 to help you do the math.

Ultimately, for most borrowers the amount of initial costs to refinance will be paid back soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your available cash. 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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