When is Refinancing Worth it?
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Some have said that only if your new interest is at least 2 points lower, should you refinance your loan. That could have been true years ago, but with the fact that refinancing has been costing less recently, it's never the wrong time to explore the options of a new mortgage loan! A refinance can be worth its cost several times over, factoring in the benefits that come, in addition to a reduced interest rate.
You could be able to bring down your interest rate (sometimes substantially) and reduce your mortgage payment amount with your refinanced loan. You also might be given the option of pulling out some of the equity in your property by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You might be able to refinance to a shorter-term mortgage, enabling you to add to your equity faster.
Fees and Expenses
Of course, you will have to pay for your process of refinancing. You'll have the same sort of fees as you did with your present mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting fees, and others.
Doing the Math
You might think about paying points to reduce your interest rate. The money you will save over the life of the mortgage loan could be substantial if you've paid up front about three percent of the new loan balance. You might hear that the points may be deducted on your income taxes, but because tax regulations are ever-changing, please consult with a tax professional before making any decisions based on this.
An additional cost that a borrower may take into account is that a reduced rate of interest will lower the interest amount you will deduct from your federal income taxes. We can help you do the math! Call us at (512) 422-9036.
All things considered, for most the total of up-front costs to refinance will be made up very quickly in savings each month. We will help you determine which program is perfect for you, considering your cash on hand, the likelihood of selling your house in the next few years, and how refinancing could effect your taxes. Call us at (512) 422-9036 to get started.
Curious about refinancing your home? Give us a call: (512) 422-9036.
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