When is Refinancing Worth it?
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Shopping for a mortgage loan? We'd be thrilled to talk about your mortgage needs! Call us at 2817780805. Ready to begin? Apply Now.
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Ever heard the old rule of thumb that says you should only refinance if the new interest rate will be at least 2 points lower than your existing one? That might have been sound advice a while back, but with refinancing dropping in cost over the last few years, it's a good time to explore the options of a new loan! A refinanced mortgage loan is often worth its cost many times over, because of the benefits that it brings, along with a lower interest rate.
Advantages
When you refinance, you might be able to reduce the interest rate and monthly mortgage payment , sometimes by a lot. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build up home equity faster by moving to a shorter-term loan.
The Cost
Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for basically the same things you were charged for at the time you got your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan may be substantial if you have paid up front about three percent of the new loan total. You may hear that these points can be deducted on your income taxes, but as tax regulations are difficult to keep up with, we urge you to speak with a tax professional before making decisions based on this.
Another cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at 2817780805.
All things considered, for most people the amount of up-front costs to refinance are paid back very quickly in savings each month. We can help you figure out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 2817780805 to get you started.
Want to know more about refinancing? Call us at 2817780805.