When is Refinancing Worth it?

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Some have said that only in the case your new interest will be at least two points lower, should you refinance your loan. Maybe that was good advice a number of years ago, but since refinance costs have been getting lower, it may be time to take a serious look. A refinance can be worth its cost many times over, considering the benefits that it brings, as well as a reduced interest rate.

Benefits

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

Expenses and Fees

Of course, you will have to pay for your the refinance process. When you refinance, you are paying for basically the same things you were charged for during your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying discount points can help you attain a better interest rate. When you pay (on average) three percent of the loan amount initially, the savings for the life of the new loan can be significant. Please talk to a tax professional before acting on hear-say that the points paid may be deducted on your federal income taxes.

Another thing about taxes is that if your interest rate is reduced, naturally you will also be lowering the paid interest amount that you can deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. Call us at 954.920.9799 to help you do the math.

Most people find that the savings per month balance out the initial cost of refinancing. We will help you figure out which loan program is the right fit for you, looking at your cash on hand, how likely you are to sell your residence in the near future, and how refinancing can effect your taxes. Call us at 954.920.9799 to get you started.

Want to know more about refinancing your home? Call us at 954.920.9799.

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