Is Refinancing Worth the Cost?
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Searching for mortgage advice? We can assist you! Call us at 9094671090. Ready to begin? Apply Now.
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Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least 2 points lower than your current rate? Perhaps that was sound advice several years ago, but as refinance costs have been getting lower, it may be time to take a serious look. A refinance is often worth its cost several times over, factoring in the benefits that it brings, as well as a lower interest rate.
Benefits
When you refinance, you could be able to reduce the interest rate and monthly payment , sometimes significantly. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity faster.
Fees and Expenses
All of these benefits do cost something, though. With your refinance, you are paying for basically the same things you paid for when you got your original mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might need to pay points (prepaid interest) to get a lower interest rate. The money you'll save over the life of the loan could be significant if you've paid up front about 3% of the new loan balance. Please consult a tax professional before acting on hear-say that these paid points may be deducted on your taxes.
Another cost that a borrower might consider is that a lower interest rate will lower the interest amount you will deduct from your taxes. Call us at 9094671090 to help you do the math.
In the end, for most borrowers the amount of up-front costs to refinance will be paid back very quickly in monthly savings. We will work with you to determine which loan program is ideal for you, considering your cash on hand, how likely you are to sell your home in the next few years, and what effect refinancing might have on your taxes. Call us at 9094671090 to get started.
Want to know more about refinancing? Call us: 9094671090.