When is Refinancing Worth it?

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It has been said that only if your new interest is at least two points below your current rate, should you refinance your loan. That might have been sound advice years ago, but with the fact that refinancing has been costing less recently, it is a good time to consider a new mortgage loan! Refinancing has a variety of advantages that can make it worth the up-front expenditure many times over.

Advantages of Refinancing

When you refinance, you could have the ability to lower your interest rate and monthly payment , sometimes significantly. You may also have the option to "cash out" some of the built-up equity in your residence, which you can use to consolidate debt, make home improvements, or plan a vacation. You might be able to refinance into a shorter-term mortgage, giving you the ability to build up your equity quicker.

Fees and Expenses

All of these advantages do come with some expense, though. When you refinance, you are paying for most of the same things you paid for during your existing mortgage loan. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might need to pay discount points (prepaid interest) to get a lower interest rate. When you pay (on average) three percent of the mortgage loan amount initially, your savings for the term of the refinanced loan can be substantial. Please consult a tax professional before acting on hear-say that these points paid can be deducted on your taxes.

Speaking of taxes, when your interest rate is lowered, of course you'll also be lowering the paid interest amount that you'll be able to deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at 561.775.2724.

Most borrowers find that the monthly savings balance out the initial cost of refinancing. We will work with you to determine which mortgage loan program is best for you, looking at your cash on hand, the likelihood of selling your home in the next few years, and how refinancing might effect your taxes. Call us at 561.775.2724 to get started.

Want to know more about refinancing your home? Call us: 561.775.2724.