When is Refinancing Worth it?
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In the market for a mortgage? We'd be thrilled to answer your questions about our mortgage offerings! Call us at 4402349660. Ready to begin? Apply Now.
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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That may have been true years ago, but with the fact that refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage! Refinancing your mortgage loan has a variety of advantages that will often make it worth the up-front cost several times over.
Benefits
You may be able to lower your interest rate (sometimes by a lot) and make smaller monthly payments with your refinanced loan. Additionally, you may be given the option of pulling out some of the equity in your house by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With lower interest rates, you may also be able to build your home equity faster by changing to a shorter term mortgage.
Expenses and Fees
All these benefits do cost something, though. With your refinance, you are paying for basically the same things you were charged for when you obtained your current mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might look into paying points to get a reduced interest rate. If you pay (on average) 3% of the loan amount initially, the savings for the term of the new mortgage loan can be substantial. You may be told that points can be deducted on your income taxes, but as tax regulations are ever-changing, please consult with your tax professional before making any decisions based on this.
Another thing about taxes is that once you reduce your interest rate, of course 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 borrowers take into account. Call us at 4402349660 to help you do the math.
Ultimately, for most borrowers the amount of up-front costs to refinance are paid back very quickly in savings each month. We will work with you to figure out which program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing may effect your taxes. Call us at 4402349660 to get started.
Curious about refinancing your home? Give us a call at 4402349660.