Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points under your present one? That might have been valid a while back, but with refinancing dropping in cost over the last few years, it is never the wrong time to explore the options of a new loan! A refinance can be worth its cost many times over, factoring in the advantages that it brings, as well as a reduced interest rate.
When you refinance, you may be able to reduce the interest rate and monthly payment , sometimes by a lot. You might also have the ability to "cash out" a portion of your home equity, that you will be able use to take care of higher interest debts, add on to your home, or take a vacation. You could have the option to refinance into a shorter-term mortgage program, giving you the ability to build up your equity quicker.
Fees and Expenses
All these advantages do come with some expense, though. You will have the same kinds of fees as with your current mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
You might consider paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount at the start, your savings for the term of the new loan can be substantial. We recommend that you consult with a tax professional before acting on rumors that any points paid can be deducted on your taxes.
Another thing about taxes is that once your interest rate is lowered, it follows that you will also be reducing the interest amount that you can deduct from your federal income taxes. This is another cost that some borrowers consider. Call us at 623-340-0934 to help you do the math.
All things considered, for most the total of initial costs to refinance will be made up soon in monthly savings. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at 623-340-0934 to get you started.
Want to know more about refinancing your home? Call us: 623-340-0934.