Weighing the Options of Refinancing

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Ever hear the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points lower than your current one? That may have been true years ago, but with refinancing dropping in cost in recent years, it is never the wrong time to think about a new loan! Refinancing has some benefits that can make it worth the initial expenditure many times over.

Benefits from Refinancing

When you refinance, you might have the ability to lower your interest rate and monthly payment , sometimes significantly. You also might have the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You might have the option to refinance to a shorter-term mortgage loan, enabling you to build your equity faster.

Fees and Expenses

Of course, you will have to pay for the the refinance process. When you refinance, you are paying for most of the same things you were charged for at the time you got your original mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Do the Math

You could offer to pay points (prepaid interest) to get a lower interest rate. Your savings on the life of the mortgage could be substantial if you have paid up front about three percent of the new loan total. Please talk to a tax professional before acting on advice that the points paid may be deducted on your federal income taxes.

One more expense that borrowers may take into account is that a reduced rate of interest will reduce the interest amount you will deduct from your taxes. Call us at (260) 338-2561 to help you do the math.

Ultimately, for most the total of up-front costs to refinance are made up soon in monthly savings. We'll help you determine what mortgage loan program is perfect for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing can effect your taxes. Call us at (260) 338-2561 to get you started.

Curious about refinancing? Call us: (260) 338-2561.

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