Weighing the Options of Refinancing

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Some have said that only if your new interest is at least two points lower, should you refinance your loan. Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it could be time to look into it. Refinancing has a number of advantages that often make it worth the initial expenditure several times over.

Advantages

When you refinance, you may be able to lower your interest rate and monthly mortgage payment , sometimes by a lot. You could also be able to "cash out" some of the built-up equity in your residence, that you may use to consolidate debts, improve your home, or plan a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by changing to a shorter-term loan.

Fees and Expenses

All these benefits do cost something, though. With your refinance, you are paying for most of the same things you were charged for during your original mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might look into paying points to reduce your interest rate. Your savings over the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan total. You may hear that these points can be deducted on your income taxes, but because tax regulations are ever-changing, please consult with your tax professional before making any decisions based on this.

One more expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you'll deduct on your taxes. Call us at 754-202-4376 to help you do the math.

Most borrowers find that the monthly savings outweigh the initial expenses of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 754-202-4376 to get started.

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

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