Weighing the Options of Refinancing
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It has been said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it could be time to take a serious look. A refinanced mortgage loan can be worth its cost many times over, factoring in the advantages that it brings, as well as a lower interest rate.
Benefits
You could be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced loan. You may also have the option to "cash out" some of the built-up equity in your residence, that you can use to consolidate debts, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity faster.
The Cost
As you probably expect, you will have to pay for your process of refinancing. When you refinance, you're paying for a lot of the same things you paid for at the time you got your original mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might investigate paying points to reduce your interest rate. If you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced mortgage loan can be significant. We recommend that you talk to a tax professional before acting on rumors that these points paid can be deducted on your federal income taxes.
Another thing about taxes is that once your interest rate is reduced, naturally you'll also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is another cost that borrowers consider. We can help you do the math! Call us at 8165258000.
Ultimately, for most the amount of up-front costs to refinance will be paid back soon in monthly savings. We will help you determine what loan program is the right fit for you, looking at your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing could have on your taxes. Call us at 8165258000 to get you started.
Want to know more about refinancing? Call us at 8165258000.