When is Refinancing Worth it?

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Some have said that only if your new interest will be at least two points below your current rate, 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 a good time to take a serious look. A refinance may be worth its cost several times over, because of the advantages that it brings, as well as a reduced interest rate.

Advantages

When you refinance, you might be able to lower your interest rate and monthly mortgage payment , perhaps considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.

Fees and Expenses

As you probably know, you will have to pay for the process of refinancing. When you refinance, you're paying for basically the same things you paid for when you obtained your original mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

You might think about paying points to get a reduced interest rate. The money you will save on the life of the mortgage loan might be substantial if you've paid up front about 3% of the new loan total. Please consult a tax professional before acting on hear-say that these paid points may be deducted on your taxes.

An additional expense that a borrower may consider is that a lower interest rate will reduce the interest amount you'll deduct from your federal income taxes. We can help you do the math! Call us at 754-202-4376.

In the end, for most people the amount of initial costs to refinance are paid back soon in savings each month. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your cash on hand. Call us at 754-202-4376 to get you started.

Curious about refinancing your home? Call us at 754-202-4376.

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