Is Refinancing Worth the Cost?
It has been said that only if your new interest is at least two points under your current rate, should you refinance your mortgage. That may have been accurate a while back, but with refinancing dropping in cost over the last few years, it's never the wrong time to explore the options of a new mortgage! A refinance can be worth its cost many times over, considering the advantages that it brings, in addition to a lower interest rate.
Benefits from Refinancing
When you refinance, you could have the ability to reduce your interest rate and mortgage payment amount, perhaps by a lot. You might also be able to "cash out" some of the built-up equity in your residence, which you can use to consolidate debts, make home improvements, or plan a vacation. With reduced rates, you might also get the chance to build up home equity faster by changing to a shorter-term mortgage.
Fees and Expenses
All these advantages do cost something, though. With your refinance, you're paying for most of the same things you were charged for during your current mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You might need to pay discount points (prepaid interest) to attain a better rate of interest. The money you'll save on the life of the mortgage may be substantial if you have paid up front about three percent of the new loan balance. You may hear that the points may be tax deductible, but as tax regulations can be difficult to keep up with, we urge you to speak with your tax professional before making decisions based on this.
Another thing about taxes is that if you bring down your interest rate, of course you will also be lowering the paid interest amount that you may deduct from your federal income taxes. This is one more expense that borrowers take into consideration. We can help you do the math! Call us at 5627761515.
Ultimately, for most borrowers the amount of up-front costs to refinance are made up soon in monthly savings. We will work with you to determine what loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing will probably have on your taxes. Call us at 949-200-3800 to get you started.
Curious about refinancing? Call us: 949-200-3800