When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least 2 points under your current rate, should you refinance your mortgage. That may have been true a while back, but as refinancing has been costing less recently, it is never the wrong time to think about a new mortgage! A refinanced loan can be worth its cost several times over, because of the benefits that may come, in addition to a lower interest rate.

Benefits

When you refinance, you could have the ability to reduce your interest rate and monthly mortgage payment , perhaps by a lot. You may also have the ability to "cash out" a portion of your home equity, which you can use to consolidate debts, make home improvements, or finance a vacation. With lower rates, you might also get the chance to build your home equity faster by changing to a shorter-term mortgage loan.

Fees and Expenses

As you probably expect, you'll have to pay for the the refinance process. You will be charged the same types of expenses and fees as with your current mortgage. Among these may be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.

Doing the Math

You might investigate paying points to get a lower interest rate. Your savings over the life of the loan might be significant if you have paid up front about three percent of the new loan balance. We recommend that you consult a tax professional before acting on rumors that the points paid can be deducted on your taxes.

Speaking of taxes, when your interest rate is lowered, of course you will also be lowering the paid interest amount that you may deduct on your taxes. This is another cost that borrowers take into consideration. We can help you do the math! Call us at 561-395-4264.

Most borrowers find that the monthly savings quickly balance out the up-front cost of a refinance. We can help you explore your options, considering the effect a refinance could have on your taxes, how likely you may be to sell in the near future, and your cash on hand. Call us at 561-395-4264 to get you started.

Curious about refinancing? Give us a call at 561-395-4264.