Weighing the Options of Refinancing
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Ever hear the pearl of wisdom that says you should only refinance if the new interest rate will be at least 2 points under your existing rate? That might have been valid years ago, but since refinancing has been costing less recently, it is never the wrong time to think about a new mortgage loan! Refinancing has a number of benefits that will often make it worth the up-front expenditure several times over.
You may be able to lower your interest rate (sometimes substantially) and make smaller monthly payments with your refinanced mortgage. You also might have the option of pulling out some of the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage, enabling you to build your equity faster.
Expenses and Fees
All of these benefits do cost something, though. You'll pay the same sort of expenses and fees as with your existing mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can result in a better interest rate. The amount 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. We recommend that you consult with a tax professional before acting on hear-say that the points paid can be deducted on your federal income taxes.
Speaking of taxes, once your interest rate is reduced, naturally you will also be reducing the paid interest amount that you can deduct from your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 562 320-0510.
Most borrowers find that the monthly savings quickly balance out the initial cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 562 320-0510 to get you started.
Curious about refinancing? Give us a call: 562 320-0510.