When is Refinancing Worth it?
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Looking for mortgage advice? We can assist you! Call us at 9162758775. Want to get started? Apply Online Now.
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Ever hear the old rule of thumb that states you should only refinance if your new interest rate will be at least two points under your existing rate? That may have been good advice a while back, but with the fact that refinancing has been costing less recently, it is a good time to think about a new mortgage loan! Refinancing your mortgage has a variety of benefits that often make it worth the initial cost a few times over.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes by a lot) and have smaller mortgage payments with a refinanced mortgage loan. You might also be able to "cash out" a portion of your home equity, that you may use to consolidate debts, improve your home, or finance a vacation. With reduced rates, you might also get the chance to build your home equity more quickly by switching to a shorter term loan.
Expenses and Fees
All these benefits do cost something, though. With your refinance, you're paying for most of the same things you were charged for when you got your current mortgage. These could include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Do the Math
You might need to pay points (prepaid interest) to attain a lower interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the refinanced mortgage loan can be great. We recommend that you consult a tax professional before acting on hear-say that these paid points may be deducted on your federal income taxes.
Another thing about taxes is that when you reduce your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers take into consideration. Call us at 9162758775 to help you do the math.
Most borrowers find that the savings per month balance out the initial cost of a refinance. We will help you determine what mortgage program is the right fit for you, taking into account your cash on hand, the likelihood of selling your house in the next few years, and how refinancing will effect your taxes. Call us at 9162758775 to get you started.
Want to know more about refinancing? Call us: 9162758775.