Is Refinancing Worth the Cost?
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Are you looking for a new mortgage? We will be glad to assist you! Give us a call at 8165258000. Want to get started? Apply Now.
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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least 2 points below your present one? That may have been good advice years ago, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage loan! Refinancing your loan has a variety of advantages that often make it worth the up-front cost a few times over.
Benefits
When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment amount, perhaps by a lot. You also could be given the option of tapping into your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build your equity quicker.
The Cost
All of these advantages do cost something, though. You'll have to pay the same sort of fees as with your current home loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might think about paying points to reduce your interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the refinanced mortgage loan can be significant. You may have heard that these points can be deducted on your income taxes, but as tax regulations can be difficult to keep up with, please consult with your tax professional before making decisions based on this.
Another thing about taxes is that once you lower your interest rate, it follows that you'll also be lowering the interest amount that you may deduct on your taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at 8165258000.
In the end, for most borrowers the amount of up-front costs to refinance will be made up very quickly in savings each month. We will work with you to find out what loan program is best for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and the effect refinancing will probably have on your taxes. Call us at 8165258000 to get you started.
Curious about refinancing your home? Call us: 8165258000.