Is Refinancing Worth the Cost?
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It has been said that only if your new interest will be at least 2 points below your current rate, should you refinance your loan. That could have been valid a while back, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage! Refinancing your mortgage loan has some advantages that will often make it worth the up-front cost a few times over.
You could be able to lower your interest rate (sometimes substantially) and have smaller mortgage payments with a refinanced mortgage loan. Additionally, you might be given the option of tapping into the equity in your house by "cashing out" a sum of money to fix up your home, consolidate debt, or take your family on a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to add to your equity quicker.
Of course, you'll have to pay for the process of refinancing. You will be charged the same types of expenses and fees as with your existing mortgage. Among these can be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
You might investigate paying points to be given a lower interest rate. Your savings on the life of the loan may be significant if you've paid up front about three percent of the new loan total. Please talk to a tax professional before acting on rumors that these paid points may be deducted on your federal income taxes.
Another expense that borrowers may consider is that a lower rate of interest will lower the interest amount you will deduct on your federal income taxes. Call us at 703.255-5810 to help you do the math.
Most borrowers find that the monthly savings balance out the up-front cost of a refinance. We'll work with you to determine what loan program is ideal for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing will probably have on your taxes. Call us at 703.255-5810 to get started.
Curious about refinancing your home? Give us a call: 703.255-5810.