When is Refinancing Worth it?

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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate is at least 2 points under your present one? Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to look into it. Refinancing your mortgage loan has a number of benefits that will often make it worth the up-front expenditure many times over.

Advantages

When you refinance, you could have the ability to lower the interest rate and monthly mortgage payment , sometimes considerably. You might also have the option to "cash out" some of the built-up equity in your residence, which you can use to take care of higher interest debts, add on to your home, or plan a vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to build up your equity quicker.

Expenses and Fees

As you probably know, you will have some fees and expenses during the the refinance process. You will have the same kinds of fees as with your existing mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Doing the Math

Paying points can help you attain a better interest rate. Your savings on the life of the mortgage could be significant if you've paid up front about three percent of the new loan balance. You might hear that these points can be tax deductible, but as tax regulations can be ever-changing, please consult with your tax professional before depending on this.

Another expense that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. Call us at 754-202-4376 to help you do the math.

Most people find that the savings per month quickly outweigh the initial cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 754-202-4376 to get you started.

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

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