Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if your new interest rate is at least two points under your current one? That could have been valid a while back, but with refinancing dropping in cost recently, it is a good time to consider a new mortgage loan! Refinancing your mortgage loan has various benefits that will often make it worth the initial expenditure several times over.
Advantages of Refinancing
When you refinance, you might have the ability to lower your interest rate and mortgage payment amount, sometimes considerably. You may also be able to "cash out" some of the built-up equity in your home, that you may use to take care of higher interest debt, improve your home, or take a vacation. With lower rates, you may also get the chance to build your home equity faster by moving to a shorter-term loan.
Expenses and Fees
As you probably expect, you will have some fees and expenses during the the refinance process. You will have the same kinds of expenses and fees as you did with your present mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can help you get a better interest rate. Your savings over the life of the mortgage may be substantial if you've paid up front about 3% of the new loan total. You may hear that points can be deducted on your income taxes, but because tax regulations can be ever-changing, please consult with a tax professional before making any decisions based on this.
Another expense that a borrower might take into account is that a reduced interest rate will lower the interest amount you will deduct on your federal income taxes. Call us at 866-300-1550 to help you do the math.
All things considered, for most borrowers the total of initial costs to refinance are paid back very quickly in monthly savings. We can help you figure out your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 866-300-1550 to get started.
Curious about refinancing your home? Give us a call: 866-300-1550.