Is Refinancing Worth the Cost?
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Some have said that only when your new interest is at least two points lower, should you refinance your mortgage. Perhaps several years ago that was sage advice, but as refinance costs have been falling recently, it may be time to look into it. A refinanced mortgage loan may be worth its cost several times over, because of the advantages that it brings, as well as a reduced interest rate.
You might be able to bring down your interest rate (sometimes by a lot) and reduce your mortgage payment amount with your refinanced loan. You might also have the ability to "cash out" a portion of your equity, which you may use to consolidate debt, make home improvements, or plan a vacation. With lower interest rates, you might also get the chance to build up home equity faster by changing to a shorter term mortgage loan.
Expenses and Fees
As you probably know, you will have to pay for your the refinance process. You'll be charged the same kinds of fees as with your existing mortgage. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying points can help you get a lower interest rate. The amount you will save over the life of the mortgage loan may be significant if you've paid up front about 3% of the new loan balance. Please consult a tax professional before acting on rumors that the points paid may be deducted on your federal income taxes.
Another expense that borrowers might take into account is that a reduced rate of interest will lower the interest amount you'll be able to deduct from your taxes. We can help you do the math! Call us at (856) 988-8100 x3015.
In the end, for most people the total of up-front costs to refinance will be made up very quickly in monthly savings. We'll help you figure out what mortgage program is right for you, considering your cash on hand, how likely you are to sell your home in the near future, and what effect refinancing will have on your taxes. Call us at (856) 988-8100 x3015 to get started.
Want to know more about refinancing your home? Call me: Office (856) 988-8100 x3015 or cell (609) 513-0872.