Is Refinancing Worth the Cost?
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Shopping for a mortgage? We'd be thrilled to answer your questions about our mortgage offerings! Call us at (941) 366-5800. Ready to begin? Apply Here.
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Ever heard the old rule of thumb that states you should only refinance if your new interest rate will be at least 2 points lower than your present one? That may have been valid a while back, but with refinancing dropping in cost recently, it is a good time to think about a new loan! Refinancing your loan has a variety of benefits that will often make it worth the initial cost a few times over.
Advantages of Refinancing
You could be able to bring down your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced loan. You could also have the option to "cash out" some of your equity, that you can use to consolidate debt, make home improvements, or finance a vacation. With reduced interest rates, you might also get the chance to build up home equity faster by changing to a shorter-term mortgage loan.
Fees and Expenses
All of these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you were charged for during your original mortgage loan. These might include settlement costs, an appraisal, lender's title insurance, underwriting expenses, and others.
Do the Math
You might think about paying points to receive a better interest rate. The amount you'll save over the life of the mortgage loan might be significant if you have paid up front about 3% of the new loan balance. Please consult a tax professional before acting on advice that the points paid can be deducted on your federal income taxes.
One more expense that borrowers might consider is that a lower rate of interest will lower the interest amount you will be able to deduct from your federal income taxes. We can help you do the math! Call us at (941) 366-5800.
Most borrowers find that the monthly savings quickly outweigh the up-front cost of a refinance. We'll work with you to determine what mortgage program is ideal for you, looking at your cash on hand, the likelihood of selling your residence in the next few years, and how refinancing may effect your taxes. Call us at (941) 366-5800 to get started.
Curious about refinancing your home? Give us a call: (941) 366-5800.