Weighing the Options of Refinancing
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Some have said that only if your new interest is at least 2 points lower, should you refinance your mortgage. Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced loan is often worth its cost several times over, factoring in the advantages that it brings, in addition to a reduced interest rate.
Benefits from Refinancing
When you refinance, you might be able to lower the interest rate and monthly mortgage payment amount, sometimes significantly. You might also have the ability to "cash out" some of your equity, which you may use to consolidate debt, add on to your home, or plan a vacation. With reduced rates, you may also get the chance to build your home equity more quickly by moving to a shorter term loan.
Expenses and Fees
Of course, you'll have some fees and expenses during your the refinance process. With your refinance, you are paying for basically the same things you were charged for at the time you obtained your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying discount points can get you a lower interest rate. The money you'll save on the life of the mortgage may be substantial if you have paid up front about three percent of the new loan balance. You may be told that points may be tax deductible, but since tax regulations are difficult to keep up with, we urge you to consult with your tax professional before considering this in your calculations.
Speaking of taxes, once your interest rate is lowered, it follows that you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is another cost that borrowers take into account. We can help you do the math! Call us at (818)645-7035.
Most people find that the savings each month quickly outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance may have on your taxes, whether you are likely to sell your home in the next couple of years, and your money on hand. Call us at (818)645-7035 to get started.
Curious about refinancing? Call us: (818)645-7035.