When is Refinancing Worth it?
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Some have said that only when your new interest will be at least two points lower, should you refinance your loan. That may have been sound advice years ago, but with the fact that refinancing has been costing less recently, it's a good time to explore the options of a new loan! Refinancing has some benefits that often make it worth the initial expenditure many times over.
You may be able to bring down your interest rate (sometimes by a lot) and have smaller monthly payments with your refinanced loan. Additionally, you could be given the option of tapping into your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build your home equity faster by switching to a shorter term loan.
Expenses and Fees
As you probably know, you will have to pay for the process of refinancing. You'll pay the same types of expenses and fees as with your present mortgage. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and so on.
Do the Math
Paying points can get you a better interest rate. The amount you will save on the life of the loan could be significant if you have paid up front about 3% of the new loan total. Please talk to a tax professional before acting on advice that the paid points can be deducted on your federal income taxes.
Another cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct on your taxes. Call us at 425-508-9988 to help you do the math.
Most people find that the savings per month quickly outweigh the initial expenses of a refinance. We will help you find out what loan program is perfect for you, considering your cash on hand, how likely you are to sell your residence in the near future, and how refinancing might effect your taxes. Call us at 425-508-9988 to get started.
Want to know more about refinancing? Give us a call: 425-508-9988.
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