Is Refinancing Worth the Cost?
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Ever hear the old rule of thumb that says you should only refinance if the new interest rate will be at least 2 points under your present one? Maybe several years ago that was wise advice, but as refinance costs have been getting lower, it may be a good time to look into it. A refinance is often worth its cost several times over, because of the benefits that may come, as well as a reduced interest rate.
Benefits from Refinancing
You may be able to bring down your interest rate (sometimes significantly) and have smaller mortgage payments with a refinanced mortgage loan. Additionally, you may be given the option of pulling out some of the equity in your property by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage, enabling you to build your equity faster.
Fees and Expenses
As you probably know, you'll have to pay for the process of refinancing. With your refinance, you are paying for many of the same things you were charged for during your existing mortgage. These may include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
You might look into paying points to receive a lower interest rate. When you pay (on average) three percent of the mortgage loan amount at the start, your savings for the life of the new mortgage loan can be great. You might hear that the points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult a tax professional before depending on this.
An additional cost that a borrower may consider is that a lower interest rate will reduce the interest amount you will deduct on your taxes. We can help you do the math! Call us at (334) 285-8850.
In the end, for most the total of initial costs to refinance will be made up soon in savings each month. We can help you figure out your options, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your cash on hand. Call us at (334) 285-8850 to get you started.
Want to know more about refinancing your home? Call us: (334) 285-8850.