Is Refinancing Worth the Cost?
In the market for a new mortgage? We will be glad to assist you! Call us at (334) 285-8850. Ready to get started? Apply Now.
Ever hear the pearl of wisdom that says you should only refinance if the new interest rate will be at least two points lower than your existing one? Perhaps that was good advice several years ago, but since refinance costs have been falling recently, it may be time to take a serious look. A refinance may be worth its cost several times over, considering the benefits that it brings, in addition to a lower interest rate.
When you refinance, you could have the ability to lower the interest rate and mortgage payment , sometimes considerably. Additionally, you might be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage, giving you the ability to add to your home equity faster.
All of these advantages do cost something, though. You'll pay the same sort of fees as with your existing mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might need to pay points (prepaid interest) to get a better rate of interest. The amount you will save on the life of the mortgage might be substantial if you've paid up front about 3% of the new loan total. You might be told that the points can be tax deductible, but since tax regulations are ever-changing, we urge you to speak with your tax professional before considering this in your calculations.
Another thing about taxes is that once you lower your interest rate, it follows that you'll also be reducing the paid interest amount that you may deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (334) 285-8850.
Most borrowers find that the savings per month quickly outweigh the initial expenses of a refinance. We will work with you to find out which program is right for you, considering your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing may have on your taxes. Call us at (334) 285-8850 to get started.
Want to know more about refinancing? Call us: (334) 285-8850.