Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points below your present one? That may have been accurate a while back, but since refinancing has been costing less over the last few years, it is a good time to explore the options of a new mortgage loan! Refinancing has a variety of benefits that will often make it worth the up-front expenditure several times over.
When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment amount, perhaps significantly. Additionally, you may be given the option of pulling out some of the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage program, enabling you to build your home equity quicker.
Expenses and Fees
As you probably expect, you will have some fees and expenses during your the refinance process. You will have to pay the same sort of fees as you did with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can get you a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the life of the new mortgage loan can be substantial. You may have heard that points can be deducted on your income taxes, but because tax regulations are ever-changing, please consult your tax professional before depending on this.
Speaking of taxes, when you lower your interest rate, naturally you'll also be lowering the interest amount that you may deduct from your taxes. This is another cost that some borrowers consider. Call us at 562 320-0510 to help you do the math.
Ultimately, for most the amount of up-front costs to refinance are made up soon in monthly savings. We'll help you determine which loan program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the near future, and what effect refinancing may have on your taxes. Call us at 562 320-0510 to get started.
Curious about refinancing your home? Give us a call: 562 320-0510.