Is Refinancing Worth the Cost?
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Ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate is at least two points below your current one? That could have been valid years ago, but with refinancing dropping in cost in recent years, it's a good time to explore the options of a new mortgage loan! Refinancing has a variety of advantages that can make it worth the initial expenditure several times over.
Benefits from Refinancing
When you refinance, you might be able to reduce the interest rate and monthly payment , perhaps considerably. You could also have the ability to "cash out" some of your home equity, which you can use to take care of higher interest debt, add on to your home, or take a vacation. With lower interest rates, you may also get the chance to build your home equity more quickly by moving to a shorter term loan.
The Cost
All these benefits do come with some expense, though. You will be charged the same types of fees as with your existing home loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might consider paying points to reduce your interest rate. If you pay (on average) three percent of the mortgage loan amount up front, your savings for the life of the new mortgage can be substantial. You may hear that these points can be tax deductible, but as tax regulations can be difficult to keep up with, we urge you to consult with a tax professional before depending on this.
Another thing about taxes is that once you reduce your interest rate, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is another cost that borrowers consider. Call us at 4054054054 to help you do the math.
Ultimately, for most the total of initial costs to refinance are made up soon in savings each month. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 4054054054 to get started.
Want to know more about refinancing your home? Call us: 4054054054.