When is Refinancing Worth it?

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Ever hear the old rule of thumb that states you should only consider refinancing if your new interest rate is at least two points under your present one? Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage is often worth its cost several times over, considering the advantages that it brings, along with a lower interest rate.

Benefits from Refinancing

When you refinance, you could be able to lower the interest rate and mortgage payment amount, sometimes significantly. You also might be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage, enabling you to build up your home equity faster.

Fees and Expenses

All these advantages do cost something, though. You will have to pay the same types of fees as with your current mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Doing the Math

You might think about paying points to reduce your interest rate. The amount you will save over the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan balance. Please consult with a tax professional before acting on hear-say that these paid points can be deducted on your taxes.

Another thing about taxes is that once your interest rate is lowered, of course you will also be lowering the interest amount that you will be able to deduct on your taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 561-395-4264.

Ultimately, for most the total of initial costs to refinance will be paid back soon in savings each month. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at 561-395-4264 to get started.

Curious about refinancing? Call us: 561-395-4264.

Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486