Weighing the Options of Refinancing

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It has been said that only if your new interest is at least 2 points below your current rate, should you refinance your loan. Maybe several years ago that was sage advice, 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 often make it worth the initial cost a few times over.

Benefits

When you refinance, you may be able to reduce your interest rate and mortgage payment , sometimes considerably. You may also have the option to "cash out" a portion of your home equity, that you will be able use to take care of higher interest debts, improve your home, or finance a vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to build your equity quicker.

Expenses and Fees

Of course, you will have to pay for your process of refinancing. When you refinance, you are paying for many of the same things you paid for during your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You might think about paying points to be given a lower interest rate. The money you will save over the life of the loan could be significant if you have paid up front about 3% of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.

Another thing about taxes is that when your interest rate is lowered, it follows that you'll also be reducing the interest amount that you may deduct from your federal income taxes. This is one more expense that some borrowers take into consideration. We can help you do the math! Call us at (972) 292-0448.

Most borrowers find that the savings each month quickly outweigh the up-front expenses of a refinance. We'll help you determine which program is ideal for you, looking at your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing might have on your taxes. Call us at (972) 292-0448 to get started.

Want to know more about refinancing? Call us at (972) 292-0448.

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