Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that states you should only refinance if your new interest rate is at least 2 points under your present one? That might have been valid a while back, but with the fact that refinancing has been costing less recently, it is never the wrong time to consider a new mortgage! A refinanced loan may be worth its cost many times over, factoring in the advantages that it brings, along with a reduced interest rate.
You could be able to lower your interest rate (sometimes by a lot) and reduce your monthly payment amount with your refinanced mortgage loan. You might also be able to "cash out" a portion of your equity, which you are able use to take care of higher interest debt, add on to your home, or take a vacation. You might have the option to refinance into a shorter-term mortgage loan, giving you the ability to build your equity quicker.
Fees and Expenses
All of these advantages do cost something, though. You'll have to pay the same sort of expenses and fees as with your present mortgage. These probably include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can result in a lower interest rate. Your savings over the life of the loan may be significant if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on hear-say that the paid points can be deducted on your taxes.
Another thing about taxes is that once you bring down your interest rate, of course you will also be reducing the interest amount that you'll be able to deduct from your taxes. This is one more expense 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 balance out the up-front cost of refinancing. We can help you explore your options, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 562 320-0510 to get you started.
Curious about refinancing? Call us: 562 320-0510.