When is Refinancing Worth it?

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Some have said that only if your new interest will be at least 2 points lower, should you refinance your loan. Perhaps that was good advice several years ago, but since refinance costs have been getting lower, it could be time to look into it. Refinancing your loan has various benefits that often make it worth the up-front expenditure several times over.

Advantages

You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced mortgage. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build your home equity more quickly by moving to a shorter term mortgage.

Fees and Expenses

As you probably expect, you'll have to pay for the the refinance process. You will have to pay the same types of fees as you did with your existing mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.

Doing the Math

Paying points can help you get a better interest rate. Your savings on the life of the loan might be substantial if you've paid up front about 3% of the new loan balance. Please consult a tax professional before acting on hear-say that these points paid can be deducted on your taxes.

Another thing about taxes is that once you reduce your interest rate, naturally you will also be reducing the paid interest amount that you can deduct on your federal income taxes. This is one more cost that borrowers consider. Call us at 561-395-4264 to help you do the math.

Ultimately, for most the total of up-front costs to refinance are paid back soon in monthly savings. We'll work with you to figure out what program is right for you, considering your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing may effect your taxes. Call us at 561-395-4264 to get started.

Want to know more about refinancing? Call us at 561-395-4264.


Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486