Weighing the Options of Refinancing
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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. Perhaps that was sound advice a number of years ago, but since refinance costs have been falling recently, it may be time to look into it. Refinancing your mortgage has a number of benefits that will often make it worth the up-front cost a few times over.
When you refinance, you might have the ability to lower your interest rate and monthly mortgage payment amount, sometimes considerably. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also get the chance to build up home equity more quickly by changing to a shorter term mortgage.
Expenses and Fees
All these advantages do cost something, though. You'll have to pay the same sort of expenses and fees as with your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might investigate paying points to reduce your interest rate. When you pay (on average) 3% of the loan amount initially, the savings for the life of the new loan can be significant. You might be told that these points may be deducted on your income taxes, but as tax regulations are difficult to keep up with, please speak with your tax professional before considering this in your calculations.
One more expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. We can help you do the math! Call us at 727-466-4301.
Most borrowers find that the savings per month balance out the up-front expenses of refinancing. We will work with you to determine what mortgage loan program is perfect for you, considering your cash on hand, and how likely you are to sell your house in the next few years. Call us at 727-466-4301 to get you started.
Curious about refinancing your home? Call us at 727-466-4301.