When is Refinancing Worth it?
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It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your mortgage. Maybe several years ago that was good advice, but since refinance costs have been falling recently, it may be a good time to look into it. Refinancing has a number of advantages that often make it worth the initial expenditure a few times over.
Benefits
When you refinance, you may be able to reduce the interest rate and monthly payment , perhaps considerably. Additionally, you might have the option of pulling out some of the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You may be able to refinance into a shorter-term mortgage, giving you the ability to build up your home equity quicker.
The Cost
All of these advantages do cost something, though. You'll have the same sort of expenses and fees as with your present home loan. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to receive a better interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the term of the refinanced mortgage can be significant. You might be told that the points can be tax deductible, but as tax regulations can be difficult to keep up with, we urge you to consult with a tax professional before considering this in your calculations.
Another thing about taxes is that once you reduce your interest rate, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers consider. Call us at 7205988300 to help you do the math.
All things considered, for most the amount of initial costs to refinance will be made up soon in monthly savings. We will help you determine which loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will probably have on your taxes. Call us at 7205988300 to get you started.
Curious about refinancing? Call us: 7205988300.