Weighing the Options of Refinancing
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Some have said that only when your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. Refinancing your loan has various benefits that will often make it worth the up-front expenditure several times over.
Benefits
When you refinance, you might be able to lower your interest rate and monthly mortgage payment amount, perhaps considerably. You also might be given the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage program, giving you the ability to build your equity quicker.
The Cost
Of course, you will have to pay for the the refinance process. With your refinance, you are paying for basically the same things you were charged for during your original mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to receive a reduced interest rate. When you pay (on average) 3% of the loan amount initially, your savings for the life of the refinanced mortgage can be great. You might hear that these points may be deducted on your income taxes, but since tax regulations are difficult to keep up with, please speak with a tax professional before considering this in your calculations.
An additional expense that a borrower may consider is that a lower rate of interest will reduce the interest amount you will deduct from your taxes. Call us at 754-202-4376 to help you do the math.
In the end, for most people the total of initial costs to refinance will be made up very quickly in monthly savings. We'll work with you to determine what mortgage loan program is perfect for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing will have on your taxes. Call us at 754-202-4376 to get you started.
Want to know more about refinancing? Call us at 754-202-4376.