Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that states you should only refinance if the new interest rate is at least two points under your present one? Perhaps several years ago that was wise advice, but as refinance costs have been getting lower, it could be a good time to take a serious look. Refinancing has a variety of advantages that can make it worth the initial cost many times over.
You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. You may also be able to "cash out" a portion of your home equity, that you can use to consolidate debt, add on to your home, or finance a vacation. With lower interest rates, you may also get the chance to build up home equity faster by switching to a shorter-term loan.
Fees and Expenses
Of course, you will have some fees and expenses during your process of refinancing. You will have the same types of expenses and fees as with your present home loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Doing the Math
You might consider paying points to reduce your interest rate. The money you'll save on the life of the mortgage may be significant if you have paid up front about three percent of the new loan total. Please consult a tax professional before acting on advice that these paid points can be deducted on your federal income taxes.
Another thing about taxes is that if your interest rate is lowered, of course you'll also be reducing the paid interest amount that you'll be able to deduct from your taxes. This is another cost that some borrowers take into account. Call us at 562 320-0510 to help you do the math.
Most borrowers find that the savings each month quickly balance out the initial expenses of refinancing. We will work with you to determine which program is ideal for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and the effect refinancing could have on your taxes. Call us at 562 320-0510 to get started.
Want to know more about refinancing? Call us at 562 320-0510.