Weighing the Options of Refinancing

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Some have said that only if your new interest is at least 2 points under your current rate, should you refinance your loan. Maybe several years ago that was good advice, but since refinance costs have been getting lower, it may be time to look into it. Refinancing has some benefits that often make it worth the up-front expenditure several times over.

Benefits from Refinancing

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

The Cost

All of these advantages do cost something, though. You'll be charged the same types of fees as you did with your current mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

Paying discount points can result in a lower interest rate. Your savings over the life of the mortgage may be significant if you've paid up front about three percent of the new loan balance. Please talk to a tax professional before acting on hear-say that any points paid can be deducted on your taxes.

Another thing about taxes is that when your interest rate is reduced, of course you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at 954.920.9799.

Most borrowers find that the savings per month balance out the initial cost of a refinance. We will work with you to figure out what mortgage program is perfect for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing will probably have on your taxes. Call us at 954.920.9799 to get you started.

Curious about refinancing your home? Give us a call at 954.920.9799.

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