When is Refinancing Worth it?
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It has been said that only if your new interest will be at least two points under your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but as refinance costs have been getting lower, it may be a good time to take a serious look. Refinancing your mortgage has a number of benefits that often make it worth the up-front expenditure many times over.
You may be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with your refinanced mortgage. You may also be able to "cash out" a portion of your home equity, which you will be able use to take care of higher interest debts, make home improvements, or plan a vacation. With reduced interest rates, you might also get the chance to build up home equity more quickly by switching to a shorter-term mortgage loan.
All of these advantages do cost something, though. You will have the same kinds of fees as with your present mortgage. Included in the list may be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
Paying points can result in a better interest rate. When you pay (on average) 3% of the mortgage loan amount initially, your savings for the life of the refinanced mortgage loan can be substantial. Please talk to a tax professional before acting on hear-say that any paid points may be deducted on your federal income taxes.
Another thing about taxes is that if you lower your interest rate, it follows that you'll also be reducing the paid interest amount that you'll be able to deduct on your taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at (678) 539-8100.
All things considered, for most people the amount of up-front costs to refinance are paid back very quickly in savings each month. We'll work with you to determine what loan program is best for you, taking into account your cash on hand, how likely you are to sell your house in the next few years, and the effect refinancing might have on your taxes. Call us at (678) 539-8100 to get you started.
Curious about refinancing your home? Call us at (678) 539-8100.