Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That could have been valid a while back, but with the fact that refinancing has been costing less over the last few years, it is a good time to consider a new mortgage! Refinancing has some advantages that can make it worth the up-front expenditure several times over.
Advantages
When you refinance, you may be able to lower your interest rate and mortgage payment amount, perhaps significantly. You could also be able to "cash out" a portion of your equity, which you are able use to consolidate debts, add on to your home, or finance a vacation. With lower interest rates, you might also get the chance to build your home equity faster by switching to a shorter term mortgage loan.
Fees and Expenses
Of course, you'll have to pay for your process of refinancing. You'll have to pay the same kinds of expenses and fees as with your existing home 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 consider paying points to receive a lower interest rate. Your savings on the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on advice that these points paid can be deducted on your federal income taxes.
An additional expense that a borrower might consider is that a reduced rate of interest will reduce the interest amount you'll deduct on your taxes. Call us at 800.465.1404.1002 to help you do the math.
Most borrowers find that the savings per month outweigh the initial cost of a refinance. We can help you figure out your options, 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 cash on hand. Call us at 800.465.1404.1002 to get started.
Want to know more about refinancing? Give us a call at 800.465.1404.1002.
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