Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. That might have been valid years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage loan! Refinancing your loan has various advantages that will often make it worth the initial cost many times over.

Benefits

You may be able to lower your interest rate (sometimes by a lot) and have smaller mortgage payments with your refinanced mortgage loan. You also may have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also get the chance to build up home equity faster by changing to a shorter-term mortgage.

Expenses and Fees

As you probably expect, you will have some fees and expenses during the the refinance process. With your refinance, you are paying for basically the same things you paid for during your existing mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might think about paying points to be given a reduced interest rate. If you pay (on average) three percent of the loan amount initially, the savings for the term of the refinanced mortgage loan can be substantial. We recommend that you talk to a tax professional before acting on hear-say that any points paid can be deducted on your federal income taxes.

An additional expense that borrowers may consider is that a reduced rate of interest will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at (585) 282-0960.

Most borrowers find that the savings each month balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your cash on hand. Call us at (585) 282-0960 to get started.

Curious about refinancing your home? Call us: (585) 282-0960.