When is Refinancing Worth it?

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Some have said that only if your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it may be time to look into it. A refinanced mortgage can be worth its cost several times over, factoring in the benefits that may come, along with a lower interest rate.

Advantages of Refinancing

When you refinance, you might have the ability to lower your interest rate and monthly mortgage payment amount, sometimes by a lot. Additionally, you could have the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build up home equity faster by switching to a shorter term mortgage.

Fees and Expenses

Of course, you'll have some fees and expenses during your the refinance process. When you refinance, you're paying for many of the same things you paid for at the time you got your current mortgage. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

Do the Math

Paying points can get you a better interest rate. When you pay (on average) 3% of the mortgage loan amount initially, your savings for the life of the refinanced mortgage can be significant. Please consult a tax professional before acting on rumors that any paid points may be deducted on your federal income taxes.

Another expense that borrowers may consider is that a reduced interest rate will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 4025970500.

Most people find that the monthly savings balance out the initial expenses of a refinance. We will help you find out what mortgage program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and the effect refinancing may have on your taxes. Call us at 4025970500 to get started.

Curious about refinancing? Call us at 4025970500.

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