When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least two points below your current rate, should you refinance your mortgage. Maybe that was sound advice a number of years ago, but as refinance costs have been falling recently, it may be time to take a serious look. A refinance may be worth its cost many times over, because of the advantages that it brings, along with a reduced interest rate.

Benefits from Refinancing

When you refinance, you may have the ability to reduce the interest rate and mortgage payment amount, perhaps considerably. You could also be able to "cash out" some of the built-up equity in your home, which you will be able use to consolidate debts, add on to your home, or plan a vacation. You could be able to refinance to a shorter-term mortgage program, enabling you to add to your home equity faster.

Expenses and Fees

All of these advantages do cost something, though. With your refinance, you are paying for basically the same things you were charged for at the time you got your current mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You could offer to pay points (prepaid interest) to attain a better interest rate. Your savings on the life of the mortgage loan could be substantial if you've paid up front about 3% of the new loan balance. Please talk to a tax professional before acting on hear-say that the paid points may be deducted on your taxes.

Another cost that borrowers might take into account is that a reduced rate of interest will reduce the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 561-395-4264.

In the end, for most the total of initial costs to refinance will be made up very quickly in savings each month. We will help you find out which program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and what effect refinancing could have on your taxes. Call us at 561-395-4264 to get you started.

Want to know more about refinancing your home? Give us a call: 561-395-4264.

Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486