Is Refinancing Worth the Cost?
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Shopping for a mortgage? We will be glad to help! Give us a call at 754-202-4376. Ready to get started? Apply Here.
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Some have said that only in the case your new interest is at least 2 points under your current rate, should you refinance your loan. That could have been true a while back, but since refinancing has been costing less recently, it's never the wrong time to think about a new loan! Refinancing has a number of advantages that will often make it worth the up-front cost many times over.
Advantages of Refinancing
When you refinance, you may have the ability to lower the interest rate and mortgage payment , sometimes significantly. You also could be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You could be able to refinance to a shorter-term mortgage, giving you the ability to add to your home equity quicker.
The Cost
Of course, you'll have to pay for your process of refinancing. When you refinance, you're paying for a lot of the same things you were charged for during your current mortgage loan. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Doing the Math
Paying discount points can get you a lower interest rate. The money you'll save over the life of the mortgage loan might be substantial if you've paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that these points paid may be deducted on your taxes.
Another thing about taxes is that when your interest rate is reduced, of course you'll also be lowering the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers consider. Call us at 754-202-4376 to help you do the math.
Most borrowers find that the savings each month balance out the up-front expenses of a refinance. We will work with you to determine what mortgage program is right for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing might have on your taxes. Call us at 754-202-4376 to get you started.
Curious about refinancing? Call us at 754-202-4376.