Is Refinancing Worth the Cost?
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Some have said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. Maybe that was sound advice a number of years ago, but as refinance costs have been falling recently, it may be time to take a serious look. A refinanced mortgage loan is often worth its cost many times over, considering the benefits that it brings, as well as a lower interest rate.
When you refinance, you could have the ability to reduce your interest rate and monthly payment , sometimes by a lot. Additionally, you might have the option of pulling out some of the equity in your property by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage loan, giving you the ability to add to your equity quicker.
Fees and Expenses
All of these advantages do come with some expense, though. With your refinance, you are paying for a lot of the same things you were charged for during your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Doing the Math
You might think about paying points to be given a lower interest rate. If you pay (on average) 3% of the loan amount initially, the savings for the life of the refinanced mortgage loan can be great. Please consult with a tax professional before acting on advice that these paid points may be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is reduced, of course you will also be lowering the interest amount that you'll be able to deduct from your federal income taxes. This is another cost that borrowers take into consideration. Call us at (800) 288-9693 to help you do the math.
Most borrowers find that the savings per month quickly balance out the initial cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (800) 288-9693 to get you started.
Want to know more about refinancing your home? Give us a call: (800) 288-9693.