When is Refinancing Worth it?
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In the market for a new mortgage loan? We'll be glad to answer your questions about your mortgage needs! Give us a call at 5626935048. Ready to get started? Apply Now.
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points below your present rate? Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it may be time to take a serious look. A refinanced mortgage loan can be worth its cost many times over, because of the advantages that it brings, as well as a lower interest rate.
Benefits
You could be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced mortgage. You may also have the ability to "cash out" a portion of the built-up equity in your residence, which you can use to take care of higher interest debt, add on to your home, or finance a vacation. With lower rates, you may also be able to build up home equity faster by moving to a shorter-term mortgage.
Expenses and Fees
Of course, you'll have some fees and expenses during the the refinance process. You will be charged the same types of fees as you did with your existing home loan. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might need to pay points (prepaid interest) to gain a more favorable interest rate. Your savings on the life of the loan may be significant if you've paid up front about 3% of the new loan balance. You may have heard that these points may be deducted on your income taxes, but as tax regulations can be ever-changing, we urge you to consult with your tax professional before depending on this.
Another expense that a borrower might take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 5626935048.
Most borrowers find that the savings each month quickly outweigh the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, whether 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 your home? Call us at 5626935048.