Weighing the Options of Refinancing

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Some have said that only when your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but since refinance costs have been getting lower, it may be time to look into it. Refinancing your mortgage loan has a number of benefits that often make it worth the initial expenditure a few times over.

Benefits from Refinancing

You might be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced mortgage loan. You might also have the ability to "cash out" a portion of the built-up equity in your residence, which you are able use to consolidate debts, improve your home, or take a vacation. You may be able to refinance to a shorter-term mortgage, giving you the ability to build up your home equity quicker.

Expenses and Fees

All of these advantages do cost something, though. With your refinance, you are paying for many of the same things you were charged for at the time you obtained your original mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might need to pay discount points (prepaid interest) to attain a lower interest rate. Your savings on the life of the loan may be substantial if you've paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points may be deducted on your taxes.

One more expense that a borrower might take into account is that a lower rate of interest will lower the interest amount you will deduct from your taxes. Call us at 8052761942 to help you do the math.

All things considered, for most people the amount of up-front costs to refinance are paid back very quickly in savings each month. We'll work with you to figure out what program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing might have on your taxes. Call us at 8052761942 to get you started.

Curious about refinancing? Give us a call: 800-506-0632.