When is Refinancing Worth it?
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Some have said that only when your new interest is at least two points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be time to take a serious look. A refinance is often worth its cost many times over, considering the benefits that come, along with a reduced interest rate.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced loan. You could also be able to "cash out" some of the built-up equity in your residence, which you will be able use to consolidate debts, make home improvements, or finance a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to build your equity quicker.
As you probably know, you'll have some fees and expenses during the process of refinancing. You will pay the same sort of fees as with your current mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might consider paying points to be given a reduced interest rate. If you pay (on average) three percent of the mortgage loan amount initially, the savings for the life of the refinanced mortgage can be great. Please consult with a tax professional before acting on advice that any paid points may be deducted on your federal income taxes.
One more cost that a borrower may consider is that a reduced interest rate will reduce the interest amount you'll be able to deduct from your federal income taxes. Call us at 4152449383 to help you do the math.
Most people find that the savings per month quickly outweigh the initial cost of a refinance. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you may be to sell in the near future, and your money on hand. Call us at 4152449383 to get you started.
Curious about refinancing your home? Give us a call at 4152449383.