Is Refinancing Worth the Cost?
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In the market for a mortgage loan? We'd be thrilled to talk about our mortgage offerings! Give us a call today at 2603382561. Ready to get started? Apply Now.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your current one? Maybe several years ago that was good advice, but as refinance costs have been getting lower, it may be time to look into it. Refinancing has various advantages that will often make it worth the up-front cost a few times over.
Benefits from Refinancing
When you refinance, you could be able to lower the interest rate and monthly mortgage payment amount, sometimes significantly. You could also be able to "cash out" some of the built-up equity in your residence, which you can use to take care of higher interest debt, add on to your home, or finance a vacation. You could have the option to refinance to a shorter-term mortgage loan, enabling you to add to your home equity faster.
Expenses and Fees
All of these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you were charged for during your existing mortgage loan. Among these will be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying discount points can get you a lower interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the term of the refinanced loan can be significant. We recommend that you talk to a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
One more expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at 2603382561.
In the end, for most the amount of initial costs to refinance are paid back soon in savings each month. We'll help you determine which loan program is right for you, considering your cash on hand, how likely you are to sell your home in the next few years, and how refinancing will effect your taxes. Call us at 2603382561 to get started.
Want to know more about refinancing? Call us at 2603382561.