Weighing the Options of Refinancing

It has been said that only when your new interest is at least two points lower, should you refinance your mortgage. Maybe that was good advice several years ago, but since refinance costs have been getting lower, it may be a good time to look into it. A refinance is often worth its cost many times over, because of the advantages that come, in addition to a reduced interest rate.

Benefits

When you refinance, you may be able to lower the interest rate and mortgage payment amount, sometimes significantly. You also could be given the option of pulling out some of the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or take your family on a vacation. You might have the option to refinance to a shorter-term mortgage program, enabling you to build your equity quicker.

The Cost

Of course, you will have to pay for the process of refinancing. With your refinance, you're paying for a lot of the same things you paid for when you got your current mortgage. Included in your costs might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.

You could have to make a penalty payment if you refinance your existing loan too soon. It all depends on your current loan contract. Some of the penalties apply only for the first year or two. We'll help you sort through the details: contact us at 866-300-1550.

Do the Math

You might consider paying points to receive a better interest rate. The amount you will save on the life of the mortgage might be significant if you've paid up front about 3% of the new loan total. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your taxes.

Another thing about taxes is that when your interest rate is reduced, of course you will also be lowering the paid interest amount that you'll be able to deduct from your taxes. This is one more expense that borrowers consider. Call us at 866-300-1550 to help you do the math.

Most borrowers find that the savings each month outweigh the initial cost of a refinance. We will help you find out which mortgage loan program is perfect for you, considering your cash on hand, how likely you are to sell your home in the near future, and how refinancing will effect your taxes. Call us at 866-300-1550 to get started.