Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but since refinance costs have been falling recently, it could be time to take a serious look. Refinancing has a variety of benefits that often make it worth the initial expenditure many times over.
When you refinance, you might be able to lower the interest rate and monthly payment , sometimes considerably. You may also be able to "cash out" some of your home equity, that you can use to consolidate debt, add on to your home, or finance a vacation. With lower rates, you may also be able to build up home equity more quickly by changing to a shorter-term mortgage.
Fees and Expenses
All of these advantages do come with some expense, though. You will be charged the same types of expenses and fees as with your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can result in a better interest rate. The amount you'll save on the life of the loan might be significant if you have paid up front about 3% of the new loan balance. You may be told that the points can be tax deductible, but as tax regulations are ever-changing, please consult with your tax professional before making any decisions based on this.
Another thing about taxes is that if you lower your interest rate, naturally you'll also be reducing the paid interest amount that you will be able to deduct from your taxes. This is another expense that borrowers take into consideration. We can help you do the math! Call us at 754-202-4376.
All things considered, for most borrowers the amount of initial costs to refinance will be paid back very quickly in monthly savings. We will help you determine what loan program is the right fit for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing will probably have on your taxes. Call us at 754-202-4376 to get started.
Curious about refinancing? Give us a call at 754-202-4376.