Weighing the Options of Refinancing
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Have you ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least two points below your present rate? That might have been accurate years ago, but with refinancing dropping in cost recently, it's never the wrong time to think about a new mortgage loan! A refinance may be worth its cost many times over, considering the benefits that it brings, along with a lower interest rate.
Advantages
When you refinance, you may be able to lower the interest rate and mortgage payment , sometimes by a lot. Additionally, you may have the option of pulling out some of your home equity by "cashing out" a sum of money to fix up your home, consolidate debt, or plan a special vacation. With lower rates, you may also get the chance to build your home equity faster by changing to a shorter-term loan.
Fees and Expenses
All of these benefits do come with some expense, though. You will pay the same sort of expenses and fees as with your present home loan. These may include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
Paying discount points can help you attain a better interest rate. Your savings over the life of the loan might be significant if you've paid up front about 3% of the new loan balance. We recommend that you consult with a tax professional before acting on hear-say that these paid points can be deducted on your federal income taxes.
One more expense that a borrower may take into account is that a reduced rate of interest will lower the interest amount you will be able to deduct on your federal income taxes. Call us at (941) 366-5800 to help you do the math.
Most borrowers find that the savings each month outweigh the up-front expenses of a refinance. We can help you figure out what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at (941) 366-5800 to get started.
Curious about refinancing? Call us at (941) 366-5800.