When is Refinancing Worth it?

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It has been said that only if your new interest will be at least two points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but as refinance costs have been falling recently, it may be time to look into it. A refinance can be worth its cost several times over, factoring in the advantages that can come, along with a lower interest rate.

Advantages

You may be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with a refinanced loan. You could also be able to "cash out" some of the built-up equity in your home, which you will be able use to take care of higher interest debt, improve your home, or plan a vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter-term mortgage loan.

Fees and Expenses

As you probably know, you'll have some fees and expenses during your the refinance process. You'll have the same types of fees as you did with your current mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

Paying discount points can help you get a better interest rate. If you pay (on average) three percent of the loan amount at the start, the savings for the term of the refinanced loan can be substantial. We recommend that you talk to a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.

Another cost that a borrower might take into account is that a reduced interest rate will lower 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 total of initial costs to refinance are paid back very quickly in monthly savings. We'll help you determine what mortgage loan program is right for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing could effect your taxes. Call us at 4357556622 to get started.

Want to know more about refinancing? Give us a call: 4357556622.