Weighing the Options of Refinancing

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Ever hear the old rule of thumb that says you should only consider refinancing if your new interest rate will be at least 2 points below your current one? That might have been true a while back, but with refinancing dropping in cost in recent years, it's never the wrong time to think about a new mortgage loan! Refinancing your mortgage has a variety of benefits that can make it worth the initial expenditure a few times over.

Advantages

You might be able to lower your interest rate (sometimes significantly) and make smaller mortgage payments with a refinanced loan. You may also have the option to "cash out" some of your equity, which you may use to take care of higher interest debt, improve your home, or finance a vacation. You could have the option to refinance to a shorter-term mortgage program, giving you the ability to build up your home equity quicker.

The Cost

Of course, you will have some fees and expenses during the process of refinancing. With your refinance, you are paying for basically the same things you paid for during your original mortgage loan. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to get a better interest rate. The amount you will save on the life of the mortgage could be substantial if you've paid up front about three percent of the new loan total. You may hear that the points can be deducted on your income taxes, but because tax regulations can be ever-changing, please consult a tax professional before considering this in your calculations.

Another thing about taxes is that once you bring down your interest rate, naturally you'll also be lowering the interest amount that you may deduct on your taxes. This is another expense that some borrowers take into account. We can help you do the math! Call us at (478) 746-2063.

All things considered, for most the total of initial costs to refinance are made up very quickly in monthly savings. We will work with you to determine what loan program is ideal for you, considering your cash on hand, the likelihood of selling your house in the next few years, and the effect refinancing could have on your taxes. Call us at (478) 746-2063 to get started.

Want to know more about refinancing? Give us a call: (478) 746-2063.

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