Is Refinancing Worth the Cost?
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Looking for mortgage advice? We'll be glad to discuss our many mortgage solutions! Give us a call at 720-598-8300. Want to get started? Apply Online Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least 2 points under your existing rate? That could have been valid a while back, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! Refinancing your mortgage loan has a variety of advantages that can make it worth the up-front expenditure many times over.
Advantages
When you refinance, you may have the ability to lower your interest rate and monthly payment , perhaps significantly. You also might have the option of tapping into the equity in your property by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance into a shorter-term mortgage loan, giving you the ability to add to your home equity faster.
Expenses and Fees
All of these benefits do cost something, though. With your refinance, you are paying for many of the same things you were charged for at the time you got your original mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You could offer to pay points (prepaid interest) to get a more favorable rate of interest. The amount you'll save over the life of the mortgage may be significant if you have paid up front about 3% of the new loan balance. You may be told that points may be deducted on your income taxes, but because tax regulations can be ever-changing, we urge you to consult with a tax professional before depending on this.
Another cost that a borrower may take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your taxes. Call us at 720-598-8300 to help you do the math.
Most people find that the savings each month balance out the up-front cost of a refinance. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 720-598-8300 to get you started.
Curious about refinancing? Give us a call at 720-598-8300.