Weighing the Options of Refinancing
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It has been said that only when your new interest is at least two points under your current rate, should you refinance your loan. That may have been true a while back, but as refinancing has been costing less over the last few years, it is never the wrong time to explore the options of a new loan! A refinanced loan is often worth its cost several times over, factoring in the benefits that can come, along with a lower interest rate.
Benefits from Refinancing
You may be able to lower your interest rate (sometimes significantly) and reduce your monthly mortgage payment amount with a refinanced loan. You could also have the option to "cash out" some of the built-up equity in your home, which you will be able use to take care of higher interest debt, improve your home, or take a vacation. With lower interest rates, you may also be able to build your home equity more quickly by changing to a shorter term loan.
As you probably expect, you'll have some fees and expenses during your the refinance process. With your refinance, you are paying for many of the same things you were charged for during your current mortgage. Among these can be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might consider paying points to reduce your interest rate. Your savings over the life of the loan may be significant if you have paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on rumors that these points paid may be deducted on your taxes.
Another thing about taxes is that once your interest rate is lowered, naturally you will also be lowering the paid interest amount that you will be able to deduct from your taxes. This is another expense that some borrowers take into account. Call us at (214) 448-4641 to help you do the math.
In the end, for most the total of initial costs to refinance will be paid back very quickly in savings each month. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the near future, and your available cash. Call us at (214) 448-4641 to get you started.
Want to know more about refinancing? Give us a call: (214) 448-4641.