Is Refinancing Worth the Cost?

It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. Perhaps that was good advice several years ago, but as refinance costs have been falling recently, it could be time to take a serious look. A refinanced loan may be worth its cost several times over, factoring in the benefits that can come, along with a reduced interest rate.

Benefits

When you refinance, you could be able to lower the interest rate and monthly mortgage payment amount, sometimes considerably. You may also have the option to "cash out" some of the built-up equity in your residence, that you are able use to take care of higher interest debt, add on to your home, or finance a vacation. You might have the option to refinance into a shorter-term mortgage, giving you the ability to build up your equity quicker.

The Cost

All these benefits do cost something, though. With your refinance, you are paying for basically the same things you paid for during your current mortgage loan. Among these will be settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.

You could have to make a penalty payment for refinancing your present mortgage too soon. It all depends on your present mortgage loan agreement. However, some of these penalties apply just to the first couple of years of your mortgage loan. We will help you figure it out: contact us at 9705329896.

Do the Math

You could need to pay points (prepaid interest) to attain a better rate of interest. The money you will save over the life of the mortgage may be substantial if you've paid up front about three percent of the new loan balance. Please consult with a tax professional before acting on hear-say that these points paid can be deducted on your federal income taxes.

Another cost that a borrower might take into account is that a reduced interest rate will lower the interest amount you'll deduct on your taxes. Call us at 9705329896 to help you do the math.

Ultimately, for most people the amount of initial costs to refinance will be made up very quickly in monthly savings. We'll work with you to figure out what mortgage loan program is best for you, considering your cash on hand, how likely you are to sell your house in the near future, and the effect refinancing will probably have on your taxes. Call us at 9705329896 to get you started.