Weighing the Options of Refinancing

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Some have said that only if your new interest is at least two points lower, should you refinance your loan. Maybe 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 mortgage loan may be worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.

Advantages

You may be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage loan. You may also have the ability to "cash out" a portion of your home equity, which you may use to consolidate debt, add on to your home, or plan a vacation. With reduced rates, you might also be able to build up home equity faster by changing to a shorter-term mortgage loan.

Expenses and Fees

All of these benefits do cost something, though. You'll be charged the same sort of expenses and fees as you did with your present mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can result in a better interest rate. Your savings over the life of the mortgage might be significant if you've paid up front about 3% of the new loan total. You might be told that these points can be tax deductible, but as tax regulations can be difficult to keep up with, please speak with a tax professional before depending on this.

Another thing about taxes is that once your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you can deduct from 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.

In the end, for most borrowers the amount of initial costs to refinance are paid back very quickly in savings each month. We can help you explore what your options are, 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 (800) 974-0509 to get started.

Want to know more about refinancing your home? Call us: (800) 974-0509.