When is Refinancing Worth it?
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It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but since refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage may be worth its cost several times over, because of the advantages that may come, along with a lower interest rate.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes significantly) and reduce your monthly payment amount with a refinanced loan. You may also have the option to "cash out" a portion of your equity, which you will be able use to take care of higher interest debt, add on to your home, or plan a vacation. With reduced interest rates, you might also get the chance to build your home equity faster by switching to a shorter term mortgage loan.
The Cost
All these advantages do cost something, though. When you refinance, you're paying for many of the same things you paid for during your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to get a reduced interest rate. Your savings on the life of the loan might be significant if you have paid up front about three percent of the new loan total. You may hear that points can be deducted on your income taxes, but because tax regulations can be difficult to keep up with, please consult with a tax professional before considering this in your calculations.
One more expense that a borrower may consider is that a reduced rate of interest will reduce the interest amount you'll deduct from your taxes. Call us at 9094671090 to help you do the math.
Most people find that the savings per month quickly balance out the up-front cost of refinancing. We'll help you find out what mortgage loan program is best for you, taking into account your cash on hand, the likelihood of selling your house in the near future, and how refinancing could effect your taxes. Call us at 9094671090 to get started.
Want to know more about refinancing your home? Give us a call at 9094671090.