When is Refinancing Worth it?
 |
 |
 |
Shopping for a mortgage? We'd be thrilled to discuss our many mortgage solutions! Give us a call at 4357556622. Ready to begin? Apply Online Now.
|
|
|
|
|
It has been said that only when your new interest will be at least two points lower, should you refinance your loan. That could have been accurate years ago, but since refinancing has been costing less recently, it's never the wrong time to think about a new mortgage loan! A refinanced mortgage loan may be worth its cost several times over, factoring in the benefits that can come, in addition to a lower interest rate.
Benefits
You may be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage. Additionally, you may 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. With reduced rates, you might also be able to build up home equity more quickly by switching to a shorter term mortgage.
The Cost
All of these benefits do come with some expense, though. When you refinance, you are paying for basically the same things you were charged for during your original mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might consider paying points to be given a reduced interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the new loan can be substantial. You may have heard that points can be tax deductible, but as tax regulations are difficult to keep up with, we urge you to consult with your tax professional before making decisions based on this.
An additional cost that a borrower may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 4357556622.
Ultimately, for most the amount of initial costs to refinance are paid back very quickly in savings each month. We will work with you to determine what mortgage program is right for you, looking at your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing may have on your taxes. Call us at 4357556622 to get you started.
Want to know more about refinancing your home? Give us a call at 4357556622.