Weighing the Options of Refinancing
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It has been said that only if your new interest will be at least 2 points lower, should you refinance your mortgage. That could have been sound advice a while back, but with refinancing dropping in cost over the last few years, it's a good time to consider a new loan! A refinance is often worth its cost several times over, because of the benefits that it brings, as well as a reduced interest rate.
When you refinance, you may have the ability to reduce your interest rate and monthly mortgage payment amount, perhaps by a lot. You might also have the ability to "cash out" some of your equity, that you are able use to consolidate debts, add on to your home, or finance a vacation. With lower interest rates, you might also be able to build up home equity more quickly by switching to a shorter term loan.
Fees and Expenses
All these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for when you got your original mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might consider paying points to be given a lower interest rate. If you pay (on average) three percent of the loan amount initially, your savings for the life of the new mortgage can be great. You may have heard that these points may be deducted on your income taxes, but because tax regulations are ever-changing, we urge you to speak with a tax professional before depending on this.
Another thing about taxes is that if your interest rate is lowered, it follows that you'll also be lowering the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into account. Call us at 201-998-9050 to help you do the math.
Most borrowers find that the monthly savings quickly outweigh the initial cost of a refinance. We will work with you to find out what mortgage program is ideal for you, looking at your cash on hand, the likelihood of selling your residence in the near future, and what effect refinancing may have on your taxes. Call us at 201-998-9050 to get you started.
Curious about refinancing your home? Give us a call: 201-998-9050.