Is Refinancing Worth the Cost?
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Some have said that only when your new interest is at least two points lower, should you refinance your loan. Maybe several years ago that was good advice, but since refinance costs have been getting lower, it could be time to take a serious look. A refinance is often worth its cost several times over, factoring in the benefits that come, as well as a lower interest rate.
You could be able to lower your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage loan. You could also have the ability to "cash out" some of your home equity, that you will be able use to take care of higher interest debt, improve your home, or plan a vacation. With lower rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term loan.
Expenses and Fees
All of these benefits do cost something, though. With your refinance, you are paying for many of the same things you paid for during your current mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might look into paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the term of the refinanced loan can be great. We recommend that you consult a tax professional before acting on advice that these points paid may be deducted on your taxes.
One more expense that a borrower might take into account is that a reduced interest rate will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (440) 234-9660.
Most borrowers find that the savings per month quickly outweigh the up-front cost of refinancing. We will work with you to determine which program is the best fit for you, considering your cash on hand, the likelihood of selling your house in the near future, and the effect refinancing will have on your taxes. Call us at (440) 234-9660 to get started.
Want to know more about refinancing? Give us a call: (440) 234-9660.