When is Refinancing Worth it?

Curious about refinancing your home? Call us at 623-340-0934.

Some have said that only if your new interest will be at least 2 points under your current rate, should you refinance your mortgage. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be time to take a serious look. A refinance may be worth its cost many times over, considering the advantages that may come, in addition to a lower interest rate.

Benefits

You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly payment amount with a refinanced mortgage. Additionally, you might be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build up home equity more quickly by changing to a shorter-term mortgage loan.

The Cost

All of these benefits do come with some expense, though. With your refinance, you're paying for many of the same things you paid for at the time you obtained your existing mortgage loan. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

If you refinance your current mortgage too quickly, there might be a penalty . This depends on the terms of your current loan. However, these penalties may apply just to the initial several years of the loan. We'll help you figure it out: contact us at 623-340-0934.

Do the Math

You might offer to pay points (prepaid interest) to get a better interest rate. The money you will save on the life of the mortgage loan could be significant if you've paid up front about three percent of the new loan balance. You might be told that points may be deducted on your income taxes, but since tax regulations are ever-changing, we urge you to speak with your tax professional before making any decisions based on this.

An additional expense that a borrower might consider is that a lower interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 623-340-0934.

All things considered, for most the total of up-front costs to refinance will be made up very quickly in monthly savings. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your available cash. Call us at 623-340-0934 to get you started.

Looking for a loan? We'd be thrilled to answer your questions about our mortgage offerings! Give us a call at 623-340-0934. Ready to get started? Apply Online Now.

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