Weighing the Options of Refinancing
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Some have said that only in the case your new interest will be at least 2 points lower, should you refinance your loan. Perhaps that was good advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to look into it. A refinance is often worth its cost many times over, considering the benefits that it brings, in addition to a reduced interest rate.
Benefits
You might be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced loan. You also could be given the option of tapping into the equity in your property by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. With lower interest rates, you might also be able to build your home equity faster by changing to a shorter term mortgage.
The Cost
As you probably know, you'll have some fees and expenses during your process of refinancing. With your refinance, you're paying for a lot of the same things you were charged for during your original mortgage. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
You might investigate paying points to reduce your interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the new loan can be substantial. You might hear that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, we urge you to consult with your tax professional before depending on this.
One more expense that a borrower may take into account is that a reduced interest rate will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at 909-660-8333.
In the end, for most the total of up-front costs to refinance will be paid back soon in monthly savings. We will work with you to figure out which program is right for you, taking into account your cash on hand, how likely you are to sell your house in the near future, and how refinancing might effect your taxes. Call us at 909-660-8333 to get started.
Want to know more about refinancing? Call us: 909-660-8333.