Weighing the Options of Refinancing
 |
 |
 |
Shopping for a mortgage loan? We'll be glad to talk about our mortgage offerings! Call us at 5852820960. Ready to get started? Apply Here.
|
|
|
|
|
Ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least 2 points under your present rate? Perhaps that was good advice a number of years ago, but since refinance costs have been getting lower, it may be a good time to look into it. A refinanced mortgage loan is often worth its cost several times over, factoring in the benefits that it brings, in addition to a reduced interest rate.
Advantages
When you refinance, you may be able to lower the interest rate and monthly payment amount, perhaps by a lot. You could also be able to "cash out" some of the built-up equity in your residence, that you can use to consolidate debt, improve your home, or finance a vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to build up your home equity faster.
The Cost
All of these benefits do cost something, though. You will be charged the same kinds of expenses and fees as you did with your present home loan. These can include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying points can result in a better interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new mortgage loan can be substantial. You may hear that points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, we urge you to consult your tax professional before making decisions based on this.
Another cost that borrowers may consider is that a reduced interest rate will lower the interest amount you will be able to deduct on your federal income taxes. Call us at 5852820960 to help you do the math.
All things considered, for most people the amount of up-front costs to refinance will be paid back very quickly in savings each month. We'll work with you to determine what loan program is perfect for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing could have on your taxes. Call us at 5852820960 to get started.
Want to know more about refinancing your home? Call us at 5852820960.