When is Refinancing Worth it?
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In the market for a new mortgage? We'll be glad to answer your questions about our mortgage offerings! Give us a call at (941) 366-5800. Ready to begin? Apply Here.
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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate is at least two points lower than your current rate? That might have been accurate a while back, but with the fact that refinancing has been costing less recently, it is a good time to explore the options of a new mortgage! Refinancing has some benefits that will often make it worth the initial expenditure several times over.
Advantages
When you refinance, you may be able to lower the interest rate and monthly mortgage payment , perhaps by a lot. You may also be able to "cash out" some of your home equity, that you can use to take care of higher interest debt, add on to your home, or finance a vacation. With reduced rates, you may also be able to build up home equity more quickly by changing to a shorter term loan.
Fees and Expenses
All of these advantages do come with some expense, though. You'll pay the same sort of expenses and fees as you did with your current mortgage. Included in your costs will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can help you get a lower interest rate. If you pay (on average) three percent of the mortgage loan amount up front, the savings for the term of the new mortgage loan can be great. Please consult a tax professional before acting on rumors that any points paid can be deducted on your federal income taxes.
Speaking of taxes, if your interest rate is reduced, naturally you'll also be lowering the interest amount that you can deduct from your federal income taxes. This is one more cost that borrowers consider. Call us at (941) 366-5800 to help you do the math.
Most people find that the monthly savings outweigh the up-front cost of a refinance. We can help you explore what your options are, considering the effect a refinance may have on your taxes, if you are likely to sell your home in the next couple of years, and your cash on hand. Call us at (941) 366-5800 to get started.
Curious about refinancing? Give us a call: (941) 366-5800.