Weighing the Options of Refinancing
 |
 |
 |
Searching for a loan? We will be glad to help! Call us at (585) 282-0960. Want to get started? Apply Now.
|
|
|
|
|
Have you ever heard the old rule of thumb that states you should only consider refinancing if the new interest rate is at least two points lower than your present one? Maybe that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be time to take a serious look. A refinanced mortgage is often worth its cost several times over, factoring in the advantages that come, along with a lower interest rate.
Advantages
When you refinance, you may be able to lower your interest rate and monthly mortgage payment amount, sometimes significantly. You also might have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.
Expenses and Fees
All these advantages do cost something, though. With your refinance, you're paying for many of the same things you paid for when you got your current mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You could offer to pay points (prepaid interest) to attain a more favorable interest rate. Your savings on the life of the loan might be substantial if you have paid up front about 3% of the new loan balance. You may hear that the points may be deducted on your income taxes, but as tax regulations can be difficult to keep up with, we urge you to consult your tax professional before considering this in your calculations.
One more expense that a borrower may take into account is that a reduced interest rate will reduce the interest amount you'll deduct from your federal income taxes. Call us at (585) 282-0960 to help you do the math.
Ultimately, for most the total of initial costs to refinance will be made up very quickly in monthly savings. We will help you determine which mortgage program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the near future, and how refinancing could effect your taxes. Call us at (585) 282-0960 to get started.
Want to know more about refinancing your home? Give us a call at (585) 282-0960.