When is Refinancing Worth it?
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In the market for a mortgage? We'll be glad to discuss our mortgage offerings! Give us a call today at 7184417000. Want to get started? Apply Here.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points under your current rate? That might have been valid a while back, but since refinancing has been costing less recently, it's a good time to explore the options of a new mortgage! A refinanced mortgage loan is often worth its cost many times over, considering the benefits that it brings, in addition to a reduced interest rate.
Advantages
When you refinance, you could have the ability to lower the interest rate and mortgage payment amount, sometimes by a lot. You might also have the option to "cash out" a portion of your equity, which you will be able use to consolidate debts, improve your home, or plan a vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by moving to a shorter term mortgage.
Expenses and Fees
As you probably know, you'll have some fees and expenses during the the refinance process. You will be charged the same kinds of expenses and fees as with your present home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You could offer to pay points (prepaid interest) to attain a more favorable rate of interest. When you pay (on average) three percent of the mortgage loan amount at the start, the savings for the life of the new loan can be significant. Please consult with a tax professional before acting on advice that any points paid may be deducted on your taxes.
An additional expense that borrowers might take into account is that a lower rate of interest will reduce the interest amount you'll deduct on your federal income taxes. Call us at 7184417000 to help you do the math.
All things considered, for most the amount of initial costs to refinance are paid back soon in monthly savings. We'll work with you to figure out which program is ideal for you, considering your cash on hand, the likelihood of selling your house in the near future, and what effect refinancing will probably have on your taxes. Call us at 7184417000 to get started.
Curious about refinancing? Give us a call: 7184417000.