Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points under your existing rate? That could have been valid a while back, but with refinancing dropping in cost recently, it is never the wrong time to think about a new mortgage loan! A refinance can be worth its cost several times over, considering the benefits that it brings, along with a reduced interest rate.
Advantages
You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with your refinanced loan. You might also be able to "cash out" some of the built-up equity in your residence, which you are able use to consolidate debts, add on to your home, or finance a vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by changing to a shorter-term mortgage.
Fees and Expenses
All of these advantages do cost something, though. You'll have the same sort of fees as you did with your current mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can result in a lower interest rate. If you pay (on average) 3% of the loan amount at the start, the savings for the life of the refinanced loan can be substantial. We recommend that you consult 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, it follows that you'll also be lowering the paid interest amount that you will be able to deduct from your taxes. This is another cost that borrowers take into account. Call us at (800) 974-0509 to help you do the math.
All things considered, for most borrowers the amount of initial costs to refinance are paid back very quickly in monthly savings. We'll help you determine what mortgage program is the best fit for you, looking at your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing could have on your taxes. Call us at (800) 974-0509 to get started.
Curious about refinancing? Give us a call: (800) 974-0509.