Weighing the Options of Refinancing

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Ever heard the pearl of wisdom that states you should only refinance if the new interest rate is at least two points under your present one? That might have been good advice a while back, but since refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage! Refinancing your mortgage has various advantages that will often make it worth the up-front cost a few times over.

Advantages

When you refinance, you could have the ability to lower the interest rate and monthly mortgage payment amount, perhaps by a lot. You could also be able to "cash out" a portion of the built-up equity in your home, that you may use to take care of higher interest debts, make home improvements, or plan a vacation. With lower interest rates, you might also get the chance to build up home equity faster by switching to a shorter term mortgage loan.

The Cost

All these benefits do cost something, though. You will pay the same kinds of expenses and fees as with your present mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might think about paying points to get a lower interest rate. When you pay (on average) 3% of the loan amount at the start, the savings for the life of the new mortgage can be great. We recommend that you consult a tax professional before acting on advice that any points paid can be deducted on your taxes.

Another cost that borrowers might consider is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. Call us at 6233400934 to help you do the math.

All things considered, for most people the total of up-front costs to refinance are paid back very quickly in savings each month. We'll work with you to determine which loan program is the ideal fit for you, looking at your cash on hand, how likely you are to sell your home in the next few years, and what effect refinancing could have on your taxes. Call us at 6233400934 to get you started.

Curious about refinancing your home? Call us at 6233400934.

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