Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least 2 points lower, should you refinance your mortgage. That might have been true years ago, but with the fact that refinancing has been costing less in recent years, it is never the wrong time to consider a new mortgage! A refinanced mortgage is often worth its cost several times over, because of the benefits that come, along with a reduced interest rate.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. You may also have the ability to "cash out" some of your home equity, which you will be able use to take care of higher interest debt, add on to your home, or take a vacation. With lower rates, you might also be able to build up home equity faster by changing to a shorter-term mortgage loan.
All of these advantages do come with some expense, though. When you refinance, you're paying for most of the same things you were charged for at the time you obtained your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can get you a lower interest rate. If you pay (on average) 3% of the mortgage loan amount initially, your savings for the life of the refinanced mortgage can be great. You may be told that these points can be tax deductible, but since tax regulations can be difficult to keep up with, please speak with a tax professional before making any decisions based on this.
One more cost that a borrower may take into account is that a lower rate of interest will reduce the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (727) 527-1454.
Most borrowers find that the monthly savings quickly outweigh the initial expenses of refinancing. We will help you find out what loan program is the best fit for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and what effect refinancing will have on your taxes. Call us at (727) 527-1454 to get started.
Curious about refinancing your home? Call us at (727) 527-1454.