Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it may be time to take a serious look. Refinancing has a number of benefits that will often make it worth the initial expenditure many times over.
Benefits
When you refinance, you could be able to lower the interest rate and mortgage payment amount, sometimes significantly. Additionally, you could be given the option of tapping into the equity in your property by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage program, enabling you to add to your equity faster.
Fees and Expenses
Of course, you will have to pay for the process of refinancing. When you refinance, you're paying for basically the same things you were charged for at the time you got your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might need to pay discount points (prepaid interest) to attain a better rate of interest. The money you'll save on the life of the loan might be significant if you've paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on rumors that any points paid can be deducted on your federal income taxes.
An additional expense that a borrower might consider is that a reduced interest rate will reduce the interest amount you will be able to deduct from your taxes. We can help you do the math! Call us at 5852820960.
Most people find that the savings per month balance out the initial cost of a refinance. We will work with you to determine what mortgage loan program is best for you, considering your cash on hand, how likely you are to sell your home in the near future, and the effect refinancing might have on your taxes. Call us at 5852820960 to get you started.
Want to know more about refinancing your home? Call us: 5852820960.