Weighing the Options of Refinancing
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It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. Maybe several years ago that was good advice, but since refinance costs have been getting lower, it may be a good time to look into it. A refinanced mortgage is often worth its cost several times over, because of the advantages that can come, as well as a reduced interest rate.
You could be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced mortgage. You may also have the ability to "cash out" some of your home equity, that you can use to consolidate debts, improve your home, or finance a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by changing to a shorter-term mortgage.
Fees and Expenses
All of these advantages do cost something, though. When you refinance, you're paying for basically the same things you paid for at the time you obtained your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can get you a better interest rate. Your savings over the life of the mortgage may be substantial if you've paid up front about three percent of the new loan balance. You might hear that points may be tax deductible, but because tax regulations can be difficult to keep up with, we urge you to consult your tax professional before depending on this.
An additional expense that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct from your taxes. Call us at 719-357-6601 to help you do the math.
All things considered, for most the total of initial costs to refinance will be paid back soon in monthly savings. We'll help you figure out what mortgage loan program is ideal for you, considering your cash on hand, the likelihood of selling your house in the next few years, and what effect refinancing might have on your taxes. Call us at 719-357-6601 to get started.
Curious about refinancing your home? Call us at 719-357-6601.