Weighing the Options of Refinancing
It has been said that only in the case your new interest is at least two points lower, should you refinance your loan. Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing has a variety of benefits that can make it worth the up-front expenditure a few times over.
You may be able to bring down your interest rate (sometimes by a lot) and make smaller monthly payments with a refinanced mortgage loan. You could also be able to "cash out" some of your home equity, that you will be able use to take care of higher interest debts, make home improvements, or take a vacation. You might be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your equity quicker.
Fees and Expenses
All these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you paid for when you obtained your existing mortgage. These can include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
You could be required to make a penalty payment for refinancing your present loan too soon. That depends on the rules of your current loan. Some of the penalties apply only to the first year or two of the mortgage loan. We will help you figure it out: contact us at 407-834-3377
Do the Math
You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan might be substantial if you've paid up front about three percent of the new loan total. You may have heard that points can be tax deductible, but since tax regulations can be ever-changing, please consult your tax professional before depending on this.
An additional expense that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. We can help you do the math! Call us at 407-834-3377.
Ultimately, for most the total of up-front costs to refinance are made up soon in savings each month. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your available cash.
Want to know more about refinancing your home? Call us: 407-834-3377.
on the link below to use our handy refinance calculator. This
calculator will help you to decide whether or not you should refinance
your current mortgage at a lower interest rate. Not only will this
calculator calculate the monthly payment and net interest savings, but
it will also calculate how many months it will take to break even on the
calculator will help you to decide whether or not it would be
advantageous for you to refinance either a single mortgage, or the
consolidation of a first and second mortgage, into a single mortgage.
Not only will this calculator calculate the monthly payment and net
interest savings (if applicable), but it will also calculate how many
months it will take to break even on the closing costs (if applicable).