Weighing the Options of Refinancing
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It has been said that only if your new interest is at least 2 points lower, should you refinance your mortgage. Maybe several years ago that was wise advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage loan can be worth its cost many times over, factoring in the benefits that can come, in addition to a lower interest rate.
When you refinance, you might have the ability to reduce your interest rate and monthly payment amount, sometimes significantly. You could also have the option to "cash out" some of the built-up equity in your home, that you can use to take care of higher interest debt, add on to your home, or finance a vacation. You may have the option to refinance into a shorter-term mortgage program, enabling you to add to your equity faster.
All of these advantages do come with some expense, though. When you refinance, you are paying for a lot of the same things you paid for during your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying discount points can help you attain a lower interest rate. When you pay (on average) three percent of the loan amount initially, your savings for the life of the refinanced loan can be substantial. We recommend that you consult a tax professional before acting on hear-say that any paid points may be deducted on your taxes.
Another thing about taxes is that once your interest rate is lowered, naturally you'll also be lowering the paid interest amount that you'll be able to deduct from your federal income taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (602) 332-9544.
Ultimately, for most borrowers the total of initial costs to refinance will be made up very quickly in savings each month. We can help you find out your options, considering the effect a refinance may have on your taxes, how likely you may be to sell in the near future, and your available cash. Call us at (602) 332-9544 to get started.
Want to know more about refinancing? Give us a call at (602) 332-9544.