When is Refinancing Worth it?

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points under your current rate? That may have been accurate a while back, but with the fact that refinancing has been costing less in recent years, it is a good time to explore the options of a new mortgage loan! Refinancing has some benefits that will often make it worth the up-front expenditure many times over.

Benefits

When you refinance, you might have the ability to lower the interest rate and mortgage payment , sometimes considerably. Additionally, you might be given the option of pulling out some of the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You could have the option to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity faster.

Fees and Expenses

All of these advantages do cost something, though. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You might investigate paying points to get a lower interest rate. The amount you'll save on the life of the mortgage may be significant if you've paid up front about three percent of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that these paid points can be deducted on your federal income taxes.

One more cost that borrowers may consider is that a reduced interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 754-202-4376.

Most people find that the monthly savings outweigh the up-front cost of a refinance. We can help you find out your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your cash on hand. Call us at 754-202-4376 to get started.

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

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