Is Refinancing Worth the Cost?
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Looking for mortgage advice? We'll be glad to talk about our mortgage offerings! Give us a call at (818)645-7035. Want to get started? Apply Online Now.
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate will be at least 2 points lower than your current one? Maybe that was good advice several years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. A refinanced mortgage is often worth its cost many times over, considering the benefits that may come, along with a lower interest rate.
Advantages
When you refinance, you could be able to lower the interest rate and mortgage payment amount, perhaps by a lot. You also might have the option of tapping into the equity in your house by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. With reduced interest rates, you might also be able to build your home equity more quickly by switching to a shorter-term mortgage.
Expenses and Fees
All of these benefits do come with some expense, though. You'll be charged the same types of expenses and fees as with your present mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
Paying points can result in a better interest rate. The money you will save over the life of the mortgage might be significant if you've paid up front about 3% of the new loan balance. You might hear that the points can be tax deductible, but since tax regulations can be ever-changing, we urge you to consult a tax professional before considering this in your calculations.
An additional expense that a borrower may take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your federal income taxes. Call us at (818)645-7035 to help you do the math.
Most people find that the monthly savings quickly balance out the up-front cost of refinancing. We'll work with you to figure out which mortgage program is best for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at (818)645-7035 to get you started.
Want to know more about refinancing your home? Call us at (818)645-7035.