Weighing the Options of Refinancing
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Some have said that only in the case your new interest is at least two points below your current rate, should you refinance your mortgage. Perhaps that was sound advice several years ago, but since refinance costs have been falling recently, it may be time to take a serious look. Refinancing your loan has a variety of benefits that can make it worth the up-front expenditure a few times over.
Benefits from Refinancing
When you refinance, you might have the ability to reduce your interest rate and monthly mortgage payment , perhaps by a lot. Additionally, you may have the option of pulling out some of the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. You could be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.
Expenses and Fees
As you probably expect, you will have some fees and expenses during the the refinance process. When you refinance, you are paying for basically the same things you paid for during your existing mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
Paying discount points can get you a lower interest rate. Your savings over the life of the loan may be significant if you've paid up front about three percent of the new loan total. You might hear that these points can be deducted on your income taxes, but because tax regulations are ever-changing, please consult with your tax professional before considering this in your calculations.
One more cost that borrowers might take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your taxes. We can help you do the math! Call us at 407-834-3377.
All things considered, for most people the amount of initial costs to refinance are paid back soon in monthly savings. We'll work with you to determine which loan program is the right fit for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and what effect refinancing will probably have on your taxes. Call us at 407-834-3377 to get you started.
Curious about refinancing your home? Give us a call at 407-834-3377.