When is Refinancing Worth it?

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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points lower than your present one? Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage can be worth its cost many times over, because of the advantages that can come, as well as a reduced interest rate.

Advantages

When you refinance, you may have the ability to reduce your interest rate and monthly mortgage payment amount, sometimes considerably. You may also be able to "cash out" some of your equity, which you will be able use to consolidate debts, add on to your home, or take a vacation. You could be able to refinance into a shorter-term mortgage, enabling you to build your home equity quicker.

The Cost

As you probably know, you'll have some fees and expenses during your process of refinancing. When you refinance, you're paying for most of the same things you were charged for when you got your current mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can result in a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, your savings for the term of the refinanced mortgage loan can be significant. We recommend that you talk to a tax professional before acting on advice that these paid points may be deducted on your federal income taxes.

Another thing about taxes is that if your interest rate is lowered, of course you'll also be reducing the paid interest amount that you will be able to deduct on your taxes. This is another cost that borrowers take into account. Call us at 9094671090 to help you do the math.

All things considered, for most borrowers the total of up-front costs to refinance will be made up soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your available cash. Call us at 9094671090 to get you started.

Curious about refinancing? Give us a call: 9094671090.

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Greystone Loans, Inc.

Opening Doors to the American Dream since 1992

14726 Ramona Ave
Chino, CA 91710-5332