When is Refinancing Worth it?
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Looking for mortgage advice? We'd be thrilled to talk about our mortgage offerings! Give us a call today at 8007903317. Ready to get started? Apply Here.
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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least 2 points below your present rate? That could have been valid a while back, but since refinancing has been costing less over the last few years, it's never the wrong time to think about a new mortgage! A refinanced loan is often worth its cost several times over, because of the benefits that can come, along with a reduced interest rate.
Benefits
When you refinance, you could have the ability to lower the interest rate and mortgage payment amount, perhaps by a lot. Additionally, you may have the option of tapping into your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance to a shorter-term mortgage program, giving you the ability to add to your equity quicker.
The Cost
As you probably know, you'll have some fees and expenses during your process of refinancing. You'll have to pay the same sort of fees as you did with your present mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
You might offer to pay points (prepaid interest) to attain a lower rate of interest. If you pay (on average) 3% of the loan amount at the start, your savings for the term of the refinanced mortgage can be great. Please talk to a tax professional before acting on rumors that any paid points may be deducted on your taxes.
An additional expense that borrowers might take into account is that a reduced interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 8007903317.
Most people find that the monthly savings balance out the up-front expenses of refinancing. We can help you find out your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 8007903317 to get you started.
Want to know more about refinancing your home? Give us a call at 8007903317.
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