Weighing the Options of Refinancing

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Ever heard the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least two points below your current one? That might have been accurate years ago, but as refinancing has been costing less in recent years, it's a good time to think about a new mortgage! Refinancing your mortgage has a number of advantages that will often make it worth the up-front expenditure a few times over.

Benefits

You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced loan. You could also have the option to "cash out" a portion of the built-up equity in your home, that you may use to consolidate debts, make home improvements, or take a vacation. You may have the option to refinance to a shorter-term mortgage loan, giving you the ability to build your home equity quicker.

Fees and Expenses

All these advantages do cost something, though. You'll pay the same sort of expenses and fees as with your present mortgage loan. Included in the list will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

Paying points can result in a lower interest rate. Your savings on the life of the mortgage could be substantial if you've paid up front about 3% of the new loan total. We recommend that you consult a tax professional before acting on hear-say that the paid points can be deducted on your federal income taxes.

Another cost that a borrower may take into account is that a lower rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 954.920.9799.

Most people find that the savings per month outweigh the initial expenses of a refinance. We'll work with you to figure out which mortgage loan program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing could effect your taxes. Call us at 954.920.9799 to get you started.

Want to know more about refinancing your home? Give us a call: 954.920.9799.

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