Weighing the Options of Refinancing

Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate is at least 2 points lower than your current one? That may have been valid a while back, but since refinancing has been costing less in recent years, it is a good time to think about a new loan! Refinancing has a variety of benefits that can make it worth the initial cost several times over.

Benefits

You might be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage loan. You also might have the option of pulling out some of the equity in your home by "cashing out" some funds to remodel your home, consolidate debt, or take your family on a vacation. With lower rates, you might also get the chance to build your home equity more quickly by switching to a shorter-term mortgage loan.

Expenses and Fees

All of these advantages do come with some expense, though. You'll be charged the same sort of fees as with your existing mortgage. Included in your costs may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

When you refinance your present mortgage too soon, you may have a penalty to pay. That depends on the rules of your present mortgage. These penalties sometimes apply only for the first year or two. We'll help you figure it out: contact us at 855-375-1211.

Doing the Math

You might look into paying points to get a lower interest rate. When you pay (on average) three percent of the loan amount at the start, the savings for the term of the new mortgage can be significant. Please consult a tax professional before acting on advice that these paid points may be deducted on your taxes.

Speaking of taxes, once you bring down your interest rate, it follows that you will also be lowering the interest amount that you will be able to deduct on your federal income taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at 855-375-1211.

Most borrowers find that the monthly savings quickly outweigh the up-front expenses of a refinance. We will help you determine what loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and the effect refinancing might have on your taxes. Call us at 855-375-1211 to get you started.