Is Refinancing Worth the Cost?
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Searching for mortgage advice? We can help! Call us at 9162758775. Want to get started? Apply Here.
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Have you ever heard the pearl of wisdom that says you should only refinance if your new interest rate is at least 2 points lower than your present rate? That may have been sound advice a while back, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new mortgage! Refinancing has various benefits that often make it worth the up-front cost a few times over.
Advantages
You may be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with your refinanced mortgage. You may also have the ability to "cash out" a portion of your home equity, which you can use to consolidate debts, improve your home, or finance a vacation. You might be able to refinance to a shorter-term mortgage loan, enabling you to build your home equity faster.
Fees and Expenses
All these benefits do come with some expense, though. You'll have the same sort of expenses and fees as with your present mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.
Do the Math
You might investigate paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the refinanced mortgage loan can be significant. We recommend that you consult with a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.
Another expense that borrowers might consider is that a reduced rate of interest will lower the interest amount you'll deduct on your federal income taxes. We can help you do the math! Call us at 9162758775.
All things considered, for most people the total of up-front costs to refinance are made up very quickly in savings each month. We can help you figure out what your options are, 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 money on hand. Call us at 9162758775 to get you started.
Want to know more about refinancing your home? Call us: 9162758775.