When is Refinancing Worth it?
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Some have said that only when your new interest will be at least two points lower, should you refinance your mortgage. That might have been sound advice years ago, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage! A refinance may be worth its cost several times over, considering the benefits that it brings, as well as a reduced interest rate.
Advantages of Refinancing
You may be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. You may also be able to "cash out" a portion of the built-up equity in your residence, which you are able use to consolidate debt, make home improvements, or take a vacation. You may have the option to refinance into a shorter-term mortgage, giving you the ability to build up your equity faster.
Fees and Expenses
All these advantages do come with some expense, though. You will have the same kinds of expenses and fees as with your current mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to be given a lower interest rate. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the refinanced mortgage can be substantial. You may have heard that the points can be tax deductible, but since tax regulations are difficult to keep up with, we urge you to consult with a tax professional before considering this in your calculations.
Another cost that a borrower may take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 9037471800.
Most people find that the savings per month quickly outweigh the up-front expenses of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 9037471800 to get started.
Want to know more about refinancing your home? Give us a call: 9037471800.