Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least 2 points lower than your present rate? That might have been sound advice years ago, but with refinancing dropping in cost recently, it is never the wrong time to think about a new loan! A refinanced mortgage may be worth its cost many times over, factoring in the benefits that come, along with a lower interest rate.
Benefits from Refinancing
When you refinance, you could have the ability to lower your interest rate and mortgage payment , sometimes by a lot. You also might have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You could be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity faster.
The Cost
All of these benefits do come with some expense, though. When you refinance, you are paying for most of the same things you paid for when you got your original mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to reduce your interest rate. Your savings over the life of the mortgage loan could be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult with a tax professional before acting on advice that these points paid may be deducted on your federal income taxes.
Another thing about taxes is that once you bring down your interest rate, naturally you will also be lowering the paid interest amount that you will be able to deduct on your federal income taxes. This is one more expense that some borrowers consider. Call us at 5852820960 to help you do the math.
Ultimately, for most people the total of up-front costs to refinance will be paid back soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 5852820960 to get started.
Curious about refinancing your home? Give us a call: 5852820960.