Is Refinancing Worth the Cost?
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Some have said that only when your new interest is at least 2 points under your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it may be a good time to look into it. A refinance can be worth its cost many times over, factoring in the benefits that can come, along with a lower interest rate.
Benefits from Refinancing
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced loan. You might also be able to "cash out" some of the built-up equity in your residence, which you can use to take care of higher interest debt, make home improvements, or plan a vacation. With reduced rates, you might also get the chance to build up home equity more quickly by moving to a shorter term loan.
Expenses and Fees
All of these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you were charged for during your existing mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan might be substantial if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on advice that the points paid can be deducted on your taxes.
An additional cost that a borrower might take into account is that a reduced interest rate will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 5626935048.
Most borrowers find that the monthly savings balance out the initial cost of a refinance. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at 5626935048 to get started.
Want to know more about refinancing? Give us a call at 5626935048.