When is Refinancing Worth it?
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Some have said that only if your new interest will be at least two points lower, should you refinance your mortgage. That may have been accurate years ago, but with refinancing dropping in cost recently, it's a good time to explore the options of a new mortgage loan! A refinanced mortgage may be worth its cost many times over, factoring in the benefits that it brings, as well as a reduced interest rate.
Benefits
You might be able to bring down your interest rate (sometimes significantly) and have smaller monthly payments with your refinanced loan. Additionally, you may have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build your home equity faster by changing to a shorter-term mortgage.
Expenses and Fees
Of course, you will have some fees and expenses during your the refinance process. With your refinance, you're paying for basically the same things you were charged for when you got your original mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
Paying discount points can get you a lower interest rate. When you pay (on average) 3% of the mortgage loan amount up front, the savings for the life of the refinanced mortgage loan can be substantial. You might be told that these points may be tax deductible, but because tax regulations can be difficult to keep up with, please speak with your tax professional before making any decisions based on this.
Another cost that a borrower may take into account is that a reduced interest rate will lower the interest amount you'll deduct on your taxes. Call us at 9094671090 to help you do the math.
All things considered, for most borrowers the amount of up-front costs to refinance are made up soon in savings each month. We can help you figure out your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 9094671090 to get started.
Curious about refinancing? Call us at 9094671090.