Weighing the Options of Refinancing
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Ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least 2 points under your existing rate? That could have been accurate a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage loan! Refinancing your loan has some benefits that will often make it worth the initial expenditure a few times over.
When you refinance, you could be able to lower the interest rate and monthly mortgage payment amount, perhaps considerably. You might also be able to "cash out" some of your home equity, that you can use to consolidate debts, make home improvements, or finance a vacation. With lower rates, you might also be able to build your home equity faster by moving to a shorter-term mortgage loan.
Expenses and Fees
As you probably expect, you'll have some fees and expenses during your the refinance process. You will be charged the same sort of expenses and fees as with your existing home loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might think about paying points to receive 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. You may hear that these points may be tax deductible, but since tax regulations are difficult to keep up with, we urge you to speak with a tax professional before depending on this.
Another thing about taxes is that if your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you may deduct from your federal income taxes. This is one more cost that some borrowers take into consideration. Call us at (334) 285-8850 to help you do the math.
Most borrowers find that the savings per month outweigh the up-front expenses of a refinance. We will help you find out what mortgage loan program is the best fit 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 your home? Give us a call: (334) 285-8850.