Is Refinancing Worth the Cost?
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It has been said that only if your new interest will be at least 2 points lower, should you refinance your loan. Maybe that was sound advice a number of years ago, but since refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced mortgage can be worth its cost several times over, factoring in the benefits that it brings, as well as a reduced interest rate.
Benefits
When you refinance, you might be able to reduce the interest rate and monthly payment amount, perhaps considerably. You also might be given 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. With lower rates, you might also be able to build up home equity more quickly by switching to a shorter term loan.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during the process of refinancing. When you refinance, you are paying for most of the same things you paid for at the time you obtained your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You could offer to pay points (prepaid interest) to gain a better rate of interest. The money you will save over the life of the loan may be significant if you've paid up front about three percent of the new loan balance. You might be told that the points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, please consult a tax professional before depending on this.
Another thing about taxes is that if you bring down your interest rate, naturally you'll also be reducing the interest amount that you can deduct on your taxes. This is one more expense that borrowers consider. We can help you do the math! Call us at 866-300-1550.
All things considered, for most the total of initial costs to refinance will be made up soon in savings each month. We will help you determine which loan program is right for you, taking into account your cash on hand, how likely you are to sell your home in the next few years, and how refinancing could effect your taxes. Call us at 866-300-1550 to get you started.
Curious about refinancing your home? Call us at 866-300-1550.