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Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least 2 points below your present one? Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it could be a good time to look into it. A refinance is often worth its cost several times over, factoring in the advantages that it brings, as well as a lower interest rate.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly payment amount, perhaps considerably. Additionally, you might have the option of tapping into the equity in your house by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to build up your home equity quicker.

Fees and Expenses

All these benefits do come with some expense, though. With your refinance, you are paying for a lot of the same things you were charged for when you got your original mortgage loan. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

Paying points can get you a lower interest rate. Your savings over the life of the loan may be significant if you've paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on hear-say that these points paid can be deducted on your taxes.

Another thing about taxes is that when you bring down your interest rate, it follows that you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers consider. Call us at (909) 467-1090 to help you do the math.

Most borrowers find that the savings each month outweigh the up-front expenses of a refinance. We will help you determine what mortgage program is perfect for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will probably have on your taxes. Call us at (909) 467-1090 to get started.

Curious about refinancing? Call us at (909) 467-1090.

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