When is Refinancing Worth it?
 |
 |
 |
Looking for mortgage advice? We'd be thrilled to discuss your mortgage needs! Give us a call at 817-878-4220. Ready to get started? Apply Online Now.
|
|
|
|
|
It has been said that only if your new interest is at least 2 points under your current rate, should you refinance your mortgage. Perhaps several years ago that was good advice, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing has a number of benefits that often make it worth the initial cost several times over.
Advantages
You could be able to bring down your interest rate (sometimes by a lot) and reduce your monthly mortgage payment amount with a refinanced mortgage loan. Additionally, you may have the option of pulling out some of the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term loan.
The Cost
All these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you paid for during your current mortgage loan. These probably include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.
Doing the Math
You could offer to pay points (prepaid interest) to get a lower interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the term of the new loan can be significant. Please consult a tax professional before acting on rumors that any paid points can be deducted on your federal income taxes.
One more 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 from your federal income taxes. We can help you do the math! Call us at 817-878-4220.
Ultimately, for most people the amount of initial costs to refinance are made up soon in savings each month. We'll help you find out what loan program is the best fit for you, taking into account your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing will effect your taxes. Call us at 817-878-4220 to get you started.
Want to know more about refinancing your home? Give us a call: 817-878-4220.