Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least 2 points below your present one? Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it may be time to look into it. Refinancing your loan has a variety of benefits that can make it worth the initial cost a few times over.
Advantages
When you refinance, you might have the ability to reduce your interest rate and monthly payment , sometimes significantly. You could also be able to "cash out" some of the built-up equity in your residence, that you can use to consolidate debt, improve your home, or finance a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Fees and Expenses
All these benefits do cost something, though. You will have the same kinds of fees as with your present mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might investigate paying points to reduce your interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the term of the new mortgage loan can be great. You might have heard that the points can be tax deductible, but as tax regulations are ever-changing, please speak with a tax professional before depending on this.
Speaking of taxes, when your interest rate is lowered, naturally you'll also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 6507631924.
Most borrowers find that the savings per month quickly outweigh the initial expenses of a refinance. We can help you figure out your options, considering the effect a refinance might have on your taxes, whether you are likely to sell your home in the next couple of years, and your available cash. Call us at 6507631924 to get started.
Want to know more about refinancing your home? Give us a call at 6507631924.