Is Refinancing Worth the Cost?
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It has been said that only in the case your new interest is at least 2 points lower, 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 take a serious look. A refinanced loan is often worth its cost many times over, factoring in the advantages that can come, as well as a reduced interest rate.
You might be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage loan. Additionally, you might have the option of tapping into your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.
Fees and Expenses
All these advantages do cost something, though. You'll have the same types of expenses and fees as with your present mortgage. These could include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
Paying discount points can get you a lower interest rate. When you pay (on average) three percent of the loan amount initially, your savings for the life of the new loan can be substantial. You might be told that points may be tax deductible, but since tax regulations are ever-changing, we urge you to speak with your tax professional before depending on this.
Another thing about taxes is that when you reduce your interest rate, naturally you will also be reducing the interest amount that you may deduct on your taxes. This is one more expense that some borrowers take into account. Call us at (800) 974-0509 to help you do the math.
Most borrowers find that the monthly savings outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at (800) 974-0509 to get started.
Want to know more about refinancing? Call us at (800) 974-0509.