Is Refinancing Worth the Cost?
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It has been said that only when your new interest will be at least two points under your current rate, should you refinance your mortgage. That could have been good advice years ago, but as refinancing has been costing less over the last few years, it's a good time to think about a new loan! Refinancing your loan has a variety of benefits that often make it worth the up-front expenditure many times over.
When you refinance, you might have the ability to lower the interest rate and mortgage payment amount, perhaps significantly. You could also have the ability to "cash out" some of your home equity, that you are able use to take care of higher interest debts, improve your home, or take a vacation. With lower interest rates, you might also be able to build your home equity faster by switching to a shorter term mortgage loan.
Of course, you will have some fees and expenses during your the refinance process. You will be charged the same sort of expenses and fees as you did with your current mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might think about paying points to reduce your interest rate. Your savings on the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan balance. Please talk to a tax professional before acting on advice that the points paid may be deducted on your federal income taxes.
An additional expense that a borrower may take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your federal income taxes. Call us at 248-644-1200 to help you do the math.
Most borrowers find that the savings each month balance out the initial cost of a refinance. We'll help you figure out what program is ideal for you, considering your cash on hand, the likelihood of selling your home in the near future, and how refinancing could effect your taxes. Call us at 248-644-1200 to get started.
Want to know more about refinancing your home? Give us a call: 248-644-1200.
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