Is Refinancing Worth the Cost?
|
|
|
Shopping for a mortgage? We will be glad to assist you! Call us at (281) 778-0805. Ready to get started? Apply Now.
|
|
|
|
|
Ever hear the old rule of thumb that says you should only refinance if the new interest rate is at least two points under your present one? That might have been good advice a while back, but as refinancing has been costing less recently, it's a good time to think about a new loan! Refinancing your loan has a variety of benefits that will often make it worth the initial expenditure several times over.
Benefits from Refinancing
When you refinance, you could be able to reduce the interest rate and monthly payment amount, sometimes significantly. You also might have the option of pulling out some of your home equity by "cashing out" some funds to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage program, giving you the ability to build up your equity faster.
Expenses and Fees
Of course, you will have some fees and expenses during your process of refinancing. With your refinance, you're paying for basically the same things you were charged for when you obtained your existing mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can help you attain a better interest rate. When you pay (on average) 3% of the mortgage loan amount initially, your savings for the term of the new mortgage can be great. Please consult a tax professional before acting on advice that any paid points may be deducted on your taxes.
Speaking of taxes, if you reduce your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another cost that borrowers take into account. Call us at (281) 778-0805 to help you do the math.
Ultimately, for most people the total of up-front costs to refinance will be paid back very quickly in monthly savings. We can help you explore what your options are, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at (281) 778-0805 to get started.
Want to know more about refinancing your home? Call us at (281) 778-0805.