Is Refinancing Worth the Cost?
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It has been said that only when your new interest will be at least two points lower, should you refinance your mortgage. That could have been true years ago, but as refinancing has been costing less in recent years, it is never the wrong time to consider a new mortgage loan! A refinance is often worth its cost several times over, because of the benefits that come, as well as a reduced interest rate.
You might be able to bring down your interest rate (sometimes by a lot) and make smaller mortgage payments with a refinanced mortgage loan. You may also have the ability to "cash out" some of your home equity, that you can use to take care of higher interest debt, make home improvements, or plan a vacation. With lower rates, you may also be able to build up home equity more quickly by moving to a shorter term mortgage.
Fees and Expenses
All these benefits do come with some expense, though. When you refinance, you are paying for basically the same things you paid for during your existing mortgage loan. Among these might be settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying points can get you a lower interest rate. Your savings over the life of the loan could be significant if you have paid up front about three percent of the new loan total. Please consult with a tax professional before acting on rumors that these points paid can be deducted on your federal income taxes.
One more cost that borrowers may take into account is that a lower interest rate 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 714-970-9700.
Most people find that the savings each month quickly outweigh the up-front expenses of a refinance. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you might be to sell in the next couple of years, and your available cash. Call us at 714-970-9700 to get started.
Curious about refinancing your home? Call us: 714-970-9700.