Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points lower, should you refinance your mortgage. That may have been accurate years ago, but with the fact that refinancing has been costing less in recent years, it's never the wrong time to explore the options of a new mortgage loan! A refinanced mortgage loan is often worth its cost several times over, because of the advantages that come, along with a reduced interest rate.

Benefits

When you refinance, you might be able to reduce your interest rate and mortgage payment , sometimes significantly. You may also have the ability to "cash out" a portion of your home equity, which you may use to consolidate debts, add on to your home, or finance a vacation. You may be able to refinance to a shorter-term mortgage, enabling you to build your equity quicker.

The Cost

All these advantages do come with some expense, though. When you refinance, you're paying for most of the same things you paid for at the time you obtained your original mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You could offer to pay points (prepaid interest) to get a more favorable rate of interest. Your savings on the life of the loan could be significant if you have paid up front about 3% of the new loan total. We recommend that you talk to a tax professional before acting on rumors that these points paid may be deducted on your taxes.

Another thing about taxes is that when your interest rate is reduced, naturally you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that some borrowers take into consideration. We can help you do the math! Call us at (800) 974-0509.

In the end, for most borrowers the total of initial costs to refinance are made up very quickly in monthly savings. We will work with you to find out what program is perfect for you, considering your cash on hand, the likelihood of selling your home in the next few years, and how refinancing could effect your taxes. Call us at (800) 974-0509 to get started.

Curious about refinancing? Give us a call at (800) 974-0509.