Weighing the Options of Refinancing
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Some have said that only when your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it may be time to take a serious look. A refinance is often worth its cost many times over, considering the benefits that can come, as well as a lower interest rate.
Advantages
When you refinance, you might be able to lower the interest rate and mortgage payment , sometimes considerably. Additionally, you might have the option of tapping into the equity in your property by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to build your home equity quicker.
Expenses and Fees
All these benefits do come with some expense, though. When you refinance, you're paying for most of the same things you paid for at the time you got your current mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Do the Math
You might look into paying points to receive a reduced interest rate. The amount you will save over the life of the loan could be substantial if you've paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.
Speaking of taxes, once your interest rate is lowered, of course you'll also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is one more cost that some borrowers take into account. We can help you do the math! Call us at 4357556622.
Most borrowers find that the monthly savings quickly outweigh the initial cost of a refinance. 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 cash on hand. Call us at 4357556622 to get you started.
Want to know more about refinancing your home? Call us: 4357556622.