Weighing the Options of Refinancing
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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate is at least two points under your existing rate? That could have been true years ago, but with refinancing dropping in cost in recent years, it is a good time to consider a new mortgage loan! Refinancing your mortgage loan has a number of benefits that often make it worth the up-front cost several times over.
When you refinance, you could have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps significantly. You also might be given the option of pulling out some of your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage loan, enabling you to build up your home equity quicker.
Of course, you will have to pay for the the refinance process. You'll pay the same kinds of expenses and fees as you did with your existing home loan. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might consider paying points to get a lower interest rate. Your savings over the life of the mortgage loan may be substantial if you have paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on advice that these points paid can be deducted on your taxes.
Another expense that borrowers may take into account is that a lower interest rate will reduce the interest amount you'll deduct on your federal income taxes. Call us at 9094671090 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of a refinance. We'll work with you to find out what program is the right fit for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing will effect your taxes. Call us at 9094671090 to get started.
Curious about refinancing your home? Give us a call: 9094671090.