Weighing the Options of Refinancing

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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 mortgage. That could have been sound advice a while back, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new loan! A refinanced loan may be worth its cost several times over, factoring in the benefits that it brings, as well as a lower interest rate.

Benefits

You might be able to lower your interest rate (sometimes by a lot) and make smaller mortgage payments with your refinanced loan. You could also have the option to "cash out" some of your equity, which you may use to take care of higher interest debt, make home improvements, or plan a vacation. With reduced rates, you might also get the chance to build up home equity faster by changing to a shorter-term mortgage.

The Cost

As you probably expect, you'll have some fees and expenses during the process of refinancing. When you refinance, you are paying for most of the same things you paid for when you got your existing mortgage loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Do the Math

Paying discount points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the refinanced mortgage loan can be substantial. Please talk to a tax professional before acting on hear-say that any paid points can be deducted on your taxes.

An additional cost that borrowers may consider is that a lower interest rate will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 754-202-4376.

Most borrowers find that the savings per month balance out the up-front cost of a refinance. We can help you find out what your options are, considering the effect a refinance could 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 you started.

Curious about refinancing your home? Give us a call: 754-202-4376.

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