Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points under your present rate? Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it may be time to take a serious look. A refinanced mortgage loan is often worth its cost several times over, because of the benefits that can come, along with a lower interest rate.
Benefits from Refinancing
When you refinance, you might have the ability to lower your interest rate and mortgage payment , sometimes considerably. You also might have the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.
Fees and Expenses
Of course, you'll have to pay for your process of refinancing. When you refinance, you are paying for a lot of the same things you were charged for when you obtained your original mortgage. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You could need to pay points (prepaid interest) to gain a lower rate of interest. The amount you'll save on the life of the loan may be significant if you have paid up front about 3% of the new loan total. Please consult a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.
Speaking of taxes, when your interest rate is lowered, of course you will also be reducing the interest amount that you will be able to deduct on your taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at (562) 693-5048.
Ultimately, for most the total of initial costs to refinance are paid back soon in savings each month. We'll work with you to figure out which loan program is the best fit for you, looking at your cash on hand, how likely you are to sell your home in the near future, and how refinancing can effect your taxes. Call us at (562) 693-5048 to get started.
Want to know more about refinancing? Call us: (562) 693-5048.