Weighing the Options of Refinancing

Curious about refinancing your home? Call us: 3105133942.

Ever heard the old rule of thumb that says you should only consider refinancing if the new interest rate will be at least two points lower than your current rate? Perhaps several years ago that was good advice, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage is often worth its cost several times over, considering the benefits that it brings, as well as a lower interest rate.

Benefits

You may be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. Additionally, you might have the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With reduced rates, you might also be able to build your home equity faster by moving to a shorter term mortgage.

Expenses and Fees

All these advantages do cost something, though. With your refinance, you are paying for basically the same things you paid for at the time you obtained your original mortgage. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

If you refinance your existing mortgage loan too quickly, there might be a penalty to pay. It all depends on your present mortgage loan contract. However, the penalties may apply only to the initial few years of your mortgage loan. We'll help you sort through the details: contact us at 3105133942.

Do the Math

You might offer to pay points (prepaid interest) to get a better interest rate. Your savings on the life of the mortgage may be significant if you have paid up front about 3% of the new loan balance. You might have heard that the points may be tax deductible, but as tax regulations can be ever-changing, please speak with a tax professional before considering this in your calculations.

One more expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you'll deduct on your federal income taxes. Call us at 3105133942 to help you do the math.

Most borrowers find that the savings each month outweigh the up-front expenses of refinancing. We'll help you determine what mortgage loan program is best for you, considering your cash on hand, how likely you are to sell your house in the next few years, and what effect refinancing may have on your taxes. Call us at 3105133942 to get started.

Are you looking for a mortgage loan? We will be glad to assist you! Call us at 3105133942. Ready to get started? Apply Now.

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