Weighing the Options of Refinancing
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Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least two points lower than your existing one? That could have been true a while back, but with the fact that refinancing has been costing less over the last few years, it is never the wrong time to consider a new mortgage! A refinanced mortgage may be worth its cost several times over, factoring in the benefits that it brings, as well as a reduced interest rate.
Benefits
When you refinance, you may have the ability to reduce the interest rate and monthly mortgage payment , perhaps considerably. You also might have the option of tapping into the equity in your home by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to build up your equity quicker.
Fees and Expenses
As you probably know, you'll have to pay for the the refinance process. When you refinance, you're paying for a lot of the same things you paid for at the time you got your existing mortgage loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying discount points can result in a better interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the term of the new mortgage loan can be substantial. Please consult a tax professional before acting on rumors that any paid points may be deducted on your taxes.
One more expense that borrowers may consider is that a lower rate of interest will reduce the interest amount you'll be able to deduct on your federal income taxes. Call us at 754-202-4376 to help you do the math.
Most borrowers find that the savings each month outweigh the initial expenses of a refinance. We will help you find out what loan program is ideal for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and how refinancing can effect your taxes. Call us at 754-202-4376 to get started.
Curious about refinancing? Give us a call: 754-202-4376.