When is Refinancing Worth it?
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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your loan. That could have been accurate years ago, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage loan! Refinancing your mortgage has some advantages that can make it worth the initial expenditure a few times over.
When you refinance, you may be able to reduce your interest rate and monthly payment , perhaps significantly. Additionally, you may be given the option of pulling out some of the equity in your home by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation. With lower rates, you may also be able to build up home equity faster by switching to a shorter term mortgage.
Expenses and Fees
All these advantages do come with some expense, though. You'll have the same sort of expenses and fees as with your present mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can result in a better interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the life of the refinanced mortgage loan can be significant. Please consult with a tax professional before acting on advice that any points paid may be deducted on your federal income taxes.
An additional expense that borrowers might take into account is that a reduced interest rate will reduce the interest amount you'll deduct on your taxes. We can help you do the math! Call us at (602) 332-9544.
Most people find that the monthly savings quickly balance out the up-front cost of refinancing. We can help you figure out what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (602) 332-9544 to get you started.
Want to know more about refinancing? Give us a call: (602) 332-9544.
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