Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least 2 points below your current rate, should you refinance your mortgage. Maybe several years ago that was wise advice, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing has various benefits that will often make it worth the initial cost several times over.
Benefits from Refinancing
When you refinance, you may be able to lower the interest rate and mortgage payment , sometimes by a lot. 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, make home improvements, or plan a vacation. With reduced rates, you may also get the chance to build up home equity more quickly by moving to a shorter term mortgage loan.
Fees and Expenses
All these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for during your existing mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could need to pay points (prepaid interest) to attain a lower rate of interest. The amount you'll save on the life of the mortgage may be significant if you've paid up front about three percent of the new loan total. We recommend that you consult with a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Speaking of taxes, if you lower your interest rate, naturally you will also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at 5626935048 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be made up soon in savings each month. We can help you find out your options, considering the effect a refinance could 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 5626935048 to get you started.
Want to know more about refinancing your home? Call us: 5626935048.