When is Refinancing Worth it?
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Are you looking for a new mortgage? We'd be thrilled to talk about your mortgage needs! Call us at 7205988300. Ready to begin? Apply Now.
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Ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points under your existing rate? That might have been accurate years ago, but with the fact that refinancing has been costing less recently, it is never the wrong time to think about a new mortgage! Refinancing has some benefits that can make it worth the up-front cost a few times over.
Advantages
When you refinance, you may be able to reduce the interest rate and monthly mortgage payment , sometimes by a lot. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to take care of higher interest debts, add on to your home, or finance a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build your home equity faster.
The Cost
As you probably expect, you will have to pay for the process of refinancing. You will have to pay the same kinds of fees as with your current home loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could need to pay points (prepaid interest) to attain a more favorable interest rate. If you pay (on average) three percent of the loan amount up front, your savings for the life of the refinanced mortgage loan can be substantial. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your taxes.
Speaking of taxes, when your interest rate is reduced, naturally you will also be reducing the interest amount that you may deduct from your taxes. This is one more cost that borrowers take into consideration. We can help you do the math! Call us at 7205988300.
Most borrowers find that the savings each month balance out the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might 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 7205988300 to get started.
Curious about refinancing your home? Call us: 7205988300.