Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only refinance if the new interest rate is at least 2 points lower than your present rate? Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it may be time to take a serious look. Refinancing your mortgage loan has a variety of advantages that can make it worth the initial cost many times over.

Advantages of Refinancing

When you refinance, you may be able to reduce the interest rate and monthly payment , perhaps significantly. You might also have the option to "cash out" some of the built-up equity in your home, that you are able use to take care of higher interest debt, improve your home, or finance a vacation. With reduced rates, you may also get the chance to build up home equity faster by moving to a shorter-term mortgage loan.

Fees and Expenses

All of these advantages do come with some expense, though. You will pay the same types of fees as you did with your present home loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You might consider paying points to get a reduced interest rate. If you pay (on average) three percent of the mortgage loan amount at the start, your savings for the term of the refinanced loan can be substantial. You may have heard that points may be tax deductible, but because tax regulations are ever-changing, please speak with your tax professional before depending on this.

One more expense that borrowers might consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at 4357556622.

In the end, for most borrowers the total of initial costs to refinance are paid back soon in monthly savings. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 4357556622 to get you started.

Want to know more about refinancing your home? Give us a call at 4357556622.