Weighing the Options of Refinancing
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Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points under your present one? Perhaps several years ago that was good advice, but as refinance costs have been getting lower, it may be time to look into it. Refinancing has a variety of advantages that often make it worth the up-front expenditure several times over.
Benefits
When you refinance, you may be able to lower your interest rate and mortgage payment amount, sometimes significantly. You also may be given the option of pulling out some of the equity in your house by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build your home equity faster by switching to a shorter-term loan.
Expenses and Fees
All of these benefits do cost something, though. With your refinance, you're paying for a lot of the same things you paid for when you obtained your existing mortgage. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying points can get you a lower interest rate. The money you'll save on the life of the loan might be substantial if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that these paid points may be deducted on your federal income taxes.
An additional cost that borrowers may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 5852820960.
Most borrowers find that the monthly savings balance out the initial cost of a refinance. We can help you find 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 money on hand. Call us at 5852820960 to get started.
Want to know more about refinancing your home? Call us: 5852820960.