When is Refinancing Worth it?
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Some have said that only if your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but as refinance costs have been getting lower, it may be time to take a serious look. A refinanced mortgage loan may be worth its cost several times over, factoring in the advantages that it brings, along with a reduced interest rate.
Advantages of Refinancing
You might be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage loan. Additionally, you might be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage, enabling you to build up your equity faster.
As you probably expect, you will have to pay for the the refinance process. You will have to pay the same types of fees as you did with your present mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can help you attain a lower interest rate. The money you will save on the life of the mortgage might be substantial if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on rumors that these points paid may be deducted on your taxes.
One more expense that a borrower might consider is that a lower interest rate will reduce the interest amount you'll be able to deduct on your taxes. Call us at 918-748-4470/877-748-4470 to help you do the math.
All things considered, for most the amount of up-front costs to refinance will be made up very quickly in savings each month. We will work with you to determine what loan program is right for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and what effect refinancing could have on your taxes. Call us at 918-748-4470/877-748-4470 to get started.
Curious about refinancing your home? Give us a call at 918-748-4470/877-748-4470.