Weighing the Options of Refinancing

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It has been said that only when your new interest is at least 2 points lower, should you refinance your mortgage. That may have been sound advice years ago, but since refinancing has been costing less over the last few years, it is a good time to think about a new mortgage! Refinancing has various advantages that will often make it worth the initial cost a few times over.

Benefits

You could be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with your refinanced mortgage loan. You might also have the option to "cash out" some of your equity, which you may use to take care of higher interest debt, make home improvements, or take a vacation. You might be able to refinance into a shorter-term mortgage program, enabling you to add to your home equity faster.

Fees and Expenses

All these benefits do cost something, though. You will have to pay the same sort of expenses and fees as you did with your current home loan. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.

Do the Math

Paying discount points can get you a lower interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the refinanced mortgage can be great. Please consult with a tax professional before acting on rumors that these paid points may be deducted on your federal income taxes.

Another expense that borrowers may consider is that a lower interest rate will lower the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 754-202-4376.

In the end, for most the total of up-front costs to refinance will be paid back very quickly in monthly savings. We will help you determine which loan program is ideal for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and what effect refinancing will probably have on your taxes. Call us at 754-202-4376 to get you started.

Want to know more about refinancing your home? Give us a call at 754-202-4376.

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