Weighing the Options of Refinancing

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It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. That might have been true years ago, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new loan! Refinancing your mortgage loan has some advantages that can make it worth the up-front expenditure a few times over.

Advantages of Refinancing

You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced loan. You also might be given the option of pulling out some of 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 might also be able to build your home equity more quickly by moving to a shorter term loan.

Expenses and Fees

All of these benefits do cost something, though. You'll pay the same sort of fees as you did with your current mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

You could need to pay discount points (prepaid interest) to gain a better interest rate. The amount you'll save on the life of the loan could be significant if you have paid up front about three percent of the new loan total. You might have heard that these points may be tax deductible, but because tax regulations can be ever-changing, we urge you to consult with a tax professional before depending on this.

One more expense that borrowers might take into account is that a reduced interest rate will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 4357556622.

Most people find that the monthly savings balance out the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 4357556622 to get you started.

Curious about refinancing? Give us a call: 4357556622.