Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only refinance if the new interest rate will be at least 2 points below your current rate? Maybe several years ago that was wise advice, but since refinance costs have been falling recently, it may be time to take a serious look. A refinanced mortgage may be worth its cost many times over, considering the benefits that it brings, as well as a reduced interest rate.
Advantages of Refinancing
You might be able to bring down your interest rate (sometimes significantly) and make smaller monthly payments with a refinanced mortgage loan. Additionally, you might be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance into a shorter-term mortgage, enabling you to add to your home equity quicker.
Fees and Expenses
Of course, you will have some fees and expenses during your process of refinancing. You'll have the same sort of expenses and fees as with your current home loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might look into paying points to be given a better interest rate. When you pay (on average) 3% of the mortgage loan amount up front, your savings for the life of the refinanced mortgage can be great. Please talk to a tax professional before acting on rumors that the points paid may be deducted on your taxes.
An additional cost that a borrower might take into account is that a reduced interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 719-357-6601.
Most people find that the monthly savings balance out the initial expenses of a refinance. We can help you figure out your options, considering the effect a refinance could 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 719-357-6601 to get you started.
Curious about refinancing? Call us: 719-357-6601.