When is Refinancing Worth it?

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Some have said that only if your new interest is at least two points below your current rate, should you refinance your mortgage. That might have been accurate a while back, but with the fact that refinancing has been costing less recently, it is a good time to consider a new mortgage loan! A refinanced mortgage is often worth its cost many times over, factoring in the advantages that it brings, along with a lower interest rate.

Advantages

You might be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced loan. You could also have the option to "cash out" some of your equity, which you can use to consolidate debt, improve your home, or take a vacation. With lower interest rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage.

The Cost

As you probably know, you'll have some fees and expenses during your process of refinancing. You will have to pay the same kinds of fees as you did with your existing home loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Do the Math

You might think about paying points to receive a reduced interest rate. When you pay (on average) three percent of the mortgage loan amount up front, the savings for the life of the new loan can be great. You may hear that these points may be deducted on your income taxes, but since tax regulations can be ever-changing, please consult with a tax professional before depending on this.

One more expense that a borrower may consider is that a lower rate of interest will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (800) 974-0509.

Most people find that the monthly savings outweigh the up-front cost of refinancing. We can help you find out 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 available cash. Call us at (800) 974-0509 to get you started.

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




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