Weighing the Options of Refinancing

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Some have said that only when your new interest is at least 2 points lower, should you refinance your loan. That might have been accurate years ago, but with refinancing dropping in cost recently, it's a good time to think about a new mortgage! Refinancing your mortgage loan has a variety of benefits that often make it worth the initial expenditure several times over.

Benefits

You could be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage. You also might have the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you may also be able to build your home equity faster by moving to a shorter term mortgage.

The Cost

All these advantages do cost something, though. You'll pay the same types of expenses and fees as with your present home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

Doing the Math

You could offer to pay discount points (prepaid interest) to attain a more favorable interest rate. The amount you'll save on the life of the mortgage loan might be significant if you've paid up front about three percent of the new loan balance. You may have heard that points may be tax deductible, but since tax regulations can be ever-changing, we urge you to consult a tax professional before making any decisions based on this.

Another expense that a borrower may consider is that a lower rate of interest will lower the interest amount you'll deduct on your taxes. Call us at 561-395-4264 to help you do the math.

All things considered, for most people the amount of up-front costs to refinance are made up soon in savings each month. We will work with you to determine what program is perfect for you, looking at 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? Call us at 561-395-4264.