When is Refinancing Worth it?
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate is at least 2 points under your present rate? Perhaps that was sound advice several years ago, but as refinance costs have been falling recently, it may be a good time to take a serious look. Refinancing has a number of advantages that will often make it worth the up-front expenditure a few times over.
When you refinance, you may be able to reduce the interest rate and monthly payment , perhaps considerably. You also might be given the option of pulling out some of the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build up home equity faster by switching to a shorter term mortgage loan.
Expenses and Fees
As you probably expect, you will have to pay for the the refinance process. You will have the same sort of fees as you did with your present mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You might investigate paying points to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, your savings for the life of the new loan can be great. Please talk to a tax professional before acting on advice that any points paid can be deducted on your taxes.
Speaking of taxes, once you lower your interest rate, naturally you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more cost that some borrowers take into consideration. Call us at 2603382561 to help you do the math.
Most people find that the savings per month quickly outweigh the up-front expenses of a refinance. We will help you determine what mortgage program is right for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing will effect your taxes. Call us at 2603382561 to get started.
Curious about refinancing? Give us a call at 2603382561.