Weighing the Options of Refinancing

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It has been said that only in the case your new interest is at least 2 points below your current rate, should you refinance your mortgage. Maybe several years ago that was sage advice, but as refinance costs have been getting lower, it may be time to look into it. A refinance is often worth its cost several times over, considering the advantages that come, in addition to a reduced interest rate.

Advantages of Refinancing

You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage. Additionally, you might have the option of pulling out some of your home equity by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to add to your home equity faster.

Expenses and Fees

All of these advantages do cost something, though. You'll have the same types of expenses and fees as you did with your present home loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

You could offer to pay discount points (prepaid interest) to gain a better interest rate. Your savings over the life of the mortgage loan might be substantial if you've paid up front about three percent of the new loan total. We recommend that you talk to a tax professional before acting on hear-say that the points paid can be deducted on your federal income taxes.

One more cost that borrowers might take into account is that a lower rate of interest will lower the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 2147187183.

Ultimately, for most borrowers the amount of initial costs to refinance are made up soon in savings each month. We'll work with you to determine what loan program is the best fit for you, considering your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing may have on your taxes. Call us at 2147187183 to get started.

Want to know more about refinancing your home? Give us a call: 2147187183.