Is Refinancing Worth the Cost?
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Have you ever heard the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least 2 points lower than your existing rate? That may have been good advice years ago, but with refinancing dropping in cost over the last few years, it is a good time to explore the options of a new mortgage loan! A refinanced loan is often worth its cost several times over, because of the benefits that can come, as well as a lower interest rate.
When you refinance, you could be able to lower your interest rate and mortgage payment , perhaps considerably. You could also be able to "cash out" a portion of your home equity, which you are able use to take care of higher interest debts, improve your home, or finance a vacation. You could be able to refinance into a shorter-term mortgage program, giving you the ability to add to your equity quicker.
Expenses and Fees
As you probably expect, you will have to pay for the process of refinancing. You will pay the same kinds of fees as you did with your present mortgage loan. Among these may be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can help you get a lower interest rate. The amount you'll save over the life of the loan may be significant if you've paid up front about 3% of the new loan total. You may have heard that these points can be deducted on your income taxes, but as tax regulations can be ever-changing, please consult with a tax professional before making any decisions based on this.
Speaking of taxes, when your interest rate is reduced, it follows that you will also be lowering the paid interest amount that you will be able to deduct on your taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 703.255-5810.
All things considered, for most people the amount of up-front costs to refinance will be paid back very quickly in savings each month. We'll work with you to figure out what mortgage loan program is ideal for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and how refinancing could effect your taxes. Call us at 703.255-5810 to get started.
Want to know more about refinancing your home? Give us a call: 703.255-5810.