Is Refinancing Worth the Cost?
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Some have said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. Maybe that was good advice several years ago, but as refinance costs have been getting lower, it could be time to take a serious look. Refinancing your mortgage has various benefits that will often make it worth the initial cost a few times over.
Benefits
When you refinance, you may be able to lower the interest rate and monthly payment , sometimes significantly. You also may be given the option of tapping into your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you may also be able to build up home equity more quickly by switching to a shorter-term loan.
Expenses and Fees
As you probably know, you will have some fees and expenses during the process of refinancing. You'll have to pay the same kinds of fees as you did with your existing mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to get a better interest rate. When you pay (on average) three percent of the loan amount initially, the savings for the life of the refinanced loan can be substantial. You may be told that the points can be deducted on your income taxes, but as tax regulations are ever-changing, please speak with a tax professional before depending on this.
Another thing about taxes is that if you reduce your interest rate, of course you will also be reducing the interest amount that you will be able to deduct on your taxes. This is another expense that some borrowers take into consideration. We can help you do the math! Call us at 4357556622.
All things considered, for most people the total of up-front costs to refinance will be made up very quickly in monthly savings. We can help you find out what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at 4357556622 to get you started.
Curious about refinancing your home? Call us at 4357556622.