Weighing the Options of Refinancing
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It has been said that only in the case your new interest is at least two points lower, should you refinance your mortgage. Maybe that was good advice several years ago, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinance is often worth its cost many times over, considering the advantages that come, along with a reduced interest rate.
Benefits
When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , perhaps significantly. You may also have the ability to "cash out" some of your home equity, which you will be able use to take care of higher interest debts, add on to your home, or take a vacation. You might have the option to refinance into a shorter-term mortgage program, enabling you to build up your home equity faster.
Fees and Expenses
Of course, you'll have to pay for the the refinance process. With your refinance, you're paying for basically the same things you paid for during your current mortgage loan. These could include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Doing the Math
Paying discount points can get you a better interest rate. Your savings on the life of the loan may be substantial if you've paid up front about three percent of the new loan total. You might be told that points can be tax deductible, but since tax regulations can be difficult to keep up with, we urge you to speak with a tax professional before making any decisions based on this.
Another thing about taxes is that once you reduce your interest rate, naturally you will also be reducing the interest amount that you'll be able to deduct on your federal income taxes. This is one more expense that some borrowers take into consideration. Call us at (941) 366-5800 to help you do the math.
Ultimately, for most the total of initial costs to refinance will be paid back soon in savings each month. We will work with you to find out which loan program is perfect for you, considering your cash on hand, the likelihood of selling your residence in the near future, and how refinancing can effect your taxes. Call us at (941) 366-5800 to get started.
Curious about refinancing? Give us a call at (941) 366-5800.