Weighing the Options of Refinancing

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It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your mortgage. That might have been good advice years ago, but with refinancing dropping in cost recently, it's never the wrong time to explore the options of a new loan! Refinancing has some benefits that can make it worth the up-front expenditure a few times over.

Benefits

When you refinance, you might be able to reduce your interest rate and mortgage payment amount, sometimes considerably. You might also have the ability to "cash out" a portion of the built-up equity in your residence, that you will be able use to take care of higher interest debt, add on to your home, or plan a vacation. You might have the option to refinance into a shorter-term mortgage, enabling you to build your home equity faster.

Fees and Expenses

As you probably know, you'll have some fees and expenses during your the refinance process. When you refinance, you are paying for basically the same things you were charged for at the time you obtained your existing mortgage. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.

Do the Math

You might look into paying points to get a lower interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, the savings for the life of the new loan can be significant. We recommend that you consult a tax professional before acting on rumors that these points paid may be deducted on your federal income taxes.

Another thing about taxes is that when your interest rate is reduced, of course you will also be lowering the interest amount that you'll be able to deduct on your taxes. This is one more expense that some borrowers consider. Call us at (334) 285-8850 to help you do the math.

Most people find that the savings per month quickly outweigh the initial expenses of refinancing. We'll work with you to determine what loan program is the right fit for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing can effect your taxes. Call us at (334) 285-8850 to get you started.

Want to know more about refinancing? Give us a call: (334) 285-8850.

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