Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing your mortgage loan has a number of benefits that can make it worth the up-front cost a few times over.

Advantages

You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage. You may also have the ability to "cash out" a portion of your home equity, that you can use to consolidate debts, make home improvements, or plan a vacation. With lower rates, you might also be able to build up home equity more quickly by changing to a shorter term mortgage loan.

Fees and Expenses

All of these advantages do come with some expense, though. With your refinance, you're paying for many of the same things you paid for during your current mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

Paying points can help you attain a better interest rate. When you pay (on average) 3% of the loan amount up front, the savings for the term of the refinanced loan can be great. You may have heard that these points may be tax deductible, but since tax regulations are difficult to keep up with, please consult a tax professional before making decisions based on this.

An additional expense that a borrower might consider is that a reduced rate of interest will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at 754-202-4376.

Most people find that the monthly savings quickly balance out the initial expenses of refinancing. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, 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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