When is Refinancing Worth it?
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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. That might have been valid years ago, but as refinancing has been costing less recently, it's a good time to consider a new loan! A refinanced mortgage can be worth its cost many times over, factoring in the advantages that may come, in addition to a reduced interest rate.
Benefits
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced loan. You could also have the option to "cash out" some of the built-up equity in your home, that you are able use to consolidate debts, make home improvements, or finance a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by switching to a shorter term mortgage.
The Cost
All these advantages do cost something, though. With your refinance, you're paying for many of the same things you were charged for during your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Do the Math
Paying points can help you attain a lower interest rate. If you pay (on average) 3% of the mortgage loan amount up front, the savings for the term of the refinanced mortgage can be significant. We recommend that you talk to a tax professional before acting on advice that the paid points can be deducted on your taxes.
One more expense that a borrower may take into account is that a reduced interest rate will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (866) 990-3838.
Most borrowers find that the monthly savings quickly outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at (866) 990-3838 to get you started.
Curious about refinancing? Give us a call: (866) 990-3838.