Weighing the Options of Refinancing

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Some have said that only when your new interest will be at least 2 points lower, should you refinance your mortgage. That could have been good advice years ago, but with refinancing dropping in cost in recent years, it's never the wrong time to consider a new mortgage loan! A refinanced loan is often worth its cost many times over, considering the benefits that may come, as well as a reduced interest rate.

Benefits

You could be able to lower your interest rate (sometimes significantly) and have smaller mortgage payments with your refinanced mortgage loan. You could also have the ability to "cash out" a portion of the built-up equity in your residence, which you are able use to take care of higher interest debts, make home improvements, or finance a vacation. With lower interest rates, you may also be able to build up home equity more quickly by changing to a shorter term loan.

The Cost

As you probably expect, you'll have to pay for your the refinance process. With your refinance, you are paying for basically the same things you were charged for when you obtained your current mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might need to pay discount points (prepaid interest) to get a more favorable interest rate. If you pay (on average) 3% of the loan amount up front, the savings for the life of the new mortgage can be great. Please consult a tax professional before acting on rumors that any paid points may be deducted on your taxes.

Another thing about taxes is that once your interest rate is lowered, it follows that you'll also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into account. We can help you do the math! Call us at (877) 226-8191.

Most people find that the monthly savings quickly balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at (877) 226-8191 to get started.

Curious about refinancing your home? Give us a call: (877) 226-8191.

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