When is Refinancing Worth it?
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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points below your existing rate? That could have been true a while back, but with refinancing dropping in cost recently, it is never the wrong time to consider a new loan! A refinance may be worth its cost several times over, considering the advantages that can come, in addition to a lower interest rate.
Advantages of Refinancing
You could be able to lower your interest rate (sometimes significantly) and make smaller monthly payments with your refinanced loan. Additionally, you could have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage program, enabling you to add to your equity quicker.
Fees and Expenses
As you probably expect, you'll have to pay for the process of refinancing. With your refinance, you're paying for basically the same things you were charged for during your current mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might look into paying points to get a reduced interest rate. Your savings on the life of the mortgage loan may be substantial if you've paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on rumors that these points paid may be deducted on your taxes.
An additional cost that borrowers might take into account is that a lower rate of interest will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at 918-748-4470/877-748-4470.
In the end, for most people the amount of up-front costs to refinance are made up very quickly in monthly savings. We can help you find out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your money on hand. Call us at 918-748-4470/877-748-4470 to get you started.
Want to know more about refinancing your home? Call us: 918-748-4470/877-748-4470.