When is Refinancing Worth it?

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It has been said that only when your new interest is at least 2 points under your current rate, should you refinance your loan. Perhaps that was good advice several years ago, but as refinance costs have been getting lower, it could be a good time to take a serious look. A refinance is often worth its cost several times over, considering the advantages that come, in addition to a reduced interest rate.

Advantages

You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage. You may also have the option to "cash out" some of your equity, which you are able use to take care of higher interest debt, improve your home, or plan a vacation. With lower interest rates, you might also get the chance to build your home equity more quickly by switching to a shorter term loan.

Fees and Expenses

Of course, you'll have to pay for your the refinance process. With your refinance, you're paying for basically the same things you paid for at the time you got your current mortgage loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.

Doing the Math

You could offer to pay points (prepaid interest) to get a lower interest rate. The amount you will save over the life of the loan could be significant if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on rumors that these points paid can be deducted on your federal income taxes.

One more expense that a borrower may consider is that a reduced interest rate will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 4787462063.

All things considered, for most people the total of initial costs to refinance are made up soon in monthly savings. We'll work with you to determine what mortgage loan program is right for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at 4787462063 to get you started.

Curious about refinancing? Call us: 4787462063.

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