Weighing the Options of Refinancing
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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 loan. That might have been accurate a while back, but with refinancing dropping in cost recently, it's a good time to think about a new mortgage! A refinance may be worth its cost many times over, factoring in the advantages that it brings, as well as a reduced interest rate.
When you refinance, you may be able to reduce your interest rate and monthly mortgage payment amount, sometimes considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance into a shorter-term mortgage program, enabling you to add to your home equity quicker.
Fees and Expenses
All these benefits do come with some expense, though. You'll be charged the same sort of expenses and fees as you did with your current mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You could offer to pay discount points (prepaid interest) to gain a lower interest rate. Your savings over the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Another thing about taxes is that if you bring down your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is another expense that borrowers take into consideration. Call us at (800) 974-0509 to help you do the math.
All things considered, for most the total of up-front costs to refinance are paid back very quickly in monthly savings. We'll work with you to determine what program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will probably have on your taxes. Call us at (800) 974-0509 to get started.
Curious about refinancing? Give us a call at (800) 974-0509.