Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that says you should only refinance if the new interest rate is at least two points lower than your current one? Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing your loan has some benefits that often make it worth the initial expenditure many times over.
Advantages of Refinancing
When you refinance, you may have the ability to lower the interest rate and mortgage payment amount, perhaps considerably. You could also be able 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. With lower interest rates, you might also be able to build up home equity more quickly by changing to a shorter term mortgage.
Expenses and Fees
All these benefits do cost something, though. When you refinance, you are paying for many of the same things you paid for at the time you got your current mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might think about paying points to receive a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the life of the new mortgage can be great. You may be told that the points may be tax deductible, but because tax regulations can be difficult to keep up with, please speak with your tax professional before considering this in your calculations.
Another cost that borrowers may take into account is that a lower rate of interest will reduce the interest amount you'll be able to deduct from your federal income taxes. Call us at 4357556622 to help you do the math.
Most people find that the savings per month quickly balance out the initial expenses of refinancing. We'll help you determine which program is ideal for you, considering your cash on hand, the likelihood of selling your home in the near future, and how refinancing might effect your taxes. Call us at 4357556622 to get you started.
Curious about refinancing? Call us at 4357556622.