Is Refinancing Worth the Cost?
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In the market for a mortgage? We can help! Give us a call today at 9094671090. Ready to get started? Apply Online Now.
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least two points lower than your existing one? Maybe that was sound advice a number of years ago, but as refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing has various benefits that will often make it worth the up-front expenditure many times over.
Advantages
When you refinance, you may have the ability to lower the interest rate and mortgage payment , sometimes by a lot. You also may have the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You might have the option to refinance to a shorter-term mortgage, giving you the ability to add to your equity faster.
The Cost
As you probably expect, you will have some fees and expenses during your the refinance process. With your refinance, you are paying for a lot of the same things you paid for when you got your current mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying discount points can help you get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, the savings for the life of the new mortgage loan can be substantial. Please consult a tax professional before acting on advice that these points paid may be deducted on your taxes.
Another thing about taxes is that if you reduce your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another expense that some borrowers consider. We can help you do the math! Call us at 9094671090.
Most people find that the savings each month quickly outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 9094671090 to get started.
Want to know more about refinancing your home? Call us: 9094671090.