Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Maybe that was good advice several years ago, but as refinance costs have been getting lower, it may be time to look into it. Refinancing has some benefits that can make it worth the up-front cost many times over.

Advantages

You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced loan. You also could be given the option of pulling out some of the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You may have the option to refinance to a shorter-term mortgage program, enabling you to add to your home equity quicker.

Fees and Expenses

As you probably expect, you will have some fees and expenses during your process of refinancing. When you refinance, you are paying for a lot of the same things you were charged for when you obtained your current mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Do the Math

You might think about paying points to reduce your interest rate. Your savings on the life of the mortgage might be significant if you have paid up front about 3% of the new loan total. Please consult a tax professional before acting on advice that these paid points can be deducted on your taxes.

An additional expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at 562 320-0510.

Ultimately, for most the total of up-front costs to refinance are paid back very quickly in monthly savings. We can help you find out what your options are, considering the effect a refinance could have on your taxes, how likely you may be to sell in the next couple of years, and your available cash. Call us at 562 320-0510 to get you started.

Curious about refinancing? Give us a call at 562 320-0510.

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