When is Refinancing Worth it?
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Searching for mortgage advice? We'll be glad to talk about your mortgage needs! Call us at 9722920448. Ready to begin? Apply Here.
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Have you ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least 2 points under your current one? Perhaps that was good advice several years ago, but since refinance costs have been falling recently, it could be a good time to look into it. Refinancing has some advantages that will often make it worth the initial cost many times over.
Benefits
When you refinance, you could be able to reduce the interest rate and monthly mortgage payment amount, sometimes considerably. You could also have the option to "cash out" some of your equity, that you are able use to take care of higher interest debts, improve your home, or finance a vacation. With reduced interest rates, you may also be able to build your home equity faster by changing to a shorter-term mortgage loan.
The Cost
Of course, you'll have to pay for the process of refinancing. You will have the same kinds of expenses and fees as you did with your present home loan. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
You could offer to pay points (prepaid interest) to attain a more favorable interest rate. When you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the new mortgage can be great. You may hear that these points may be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before depending on this.
One more cost that borrowers might consider is that a reduced interest rate will reduce the interest amount you will be able to deduct on your taxes. We can help you do the math! Call us at 9722920448.
Most people find that the monthly savings balance out the initial cost of refinancing. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 9722920448 to get started.
Curious about refinancing? Give us a call: 9722920448.