When is Refinancing Worth it?
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Are you looking for a mortgage loan? We'd be thrilled to talk about your mortgage needs! Give us a call at 5626935048. Ready to begin? Apply Here.
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Ever hear the old rule of thumb that states you should only refinance if your new interest rate is at least two points under your existing rate? Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced loan may be worth its cost several times over, because of the benefits that it brings, along with a reduced interest rate.
Advantages
You may be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage. You could also have the ability to "cash out" some of your equity, that you may use to consolidate debt, improve your home, or take a vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage loan.
Expenses and Fees
All these benefits do come with some expense, though. With your refinance, you are paying for basically the same things you paid for during your original mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might investigate paying points to be given a better interest rate. Your savings over the life of the mortgage might be substantial if you have paid up front about 3% of the new loan total. You may hear that these points may be tax deductible, but because tax regulations are ever-changing, we urge you to consult with your tax professional before making any decisions based on this.
One more expense that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 5626935048.
Ultimately, for most the total of up-front costs to refinance are paid back soon in savings each month. We can help you figure out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at 5626935048 to get started.
Want to know more about refinancing your home? Give us a call: 5626935048.