Weighing the Options of Refinancing

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Some have said that only in the case your new interest is at least two points lower, should you refinance your mortgage. That could have been valid a while back, but since refinancing has been costing less recently, it is never the wrong time to explore the options of a new mortgage loan! Refinancing your mortgage has various advantages that often make it worth the up-front cost a few times over.

Benefits

When you refinance, you could have the ability to reduce the interest rate and monthly mortgage payment , perhaps significantly. You might also have the ability to "cash out" some of your equity, that you may use to take care of higher interest debts, add on to your home, or plan a vacation. With lower rates, you may also be able to build up home equity more quickly by moving to a shorter term mortgage.

Fees and Expenses

As you probably expect, you will have to pay for your process of refinancing. When you refinance, you're paying for many of the same things you were charged for during your original mortgage. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Doing the Math

You might think about paying points to receive a better interest rate. If you pay (on average) 3% of the mortgage loan amount at the start, your savings for the term of the refinanced loan can be significant. We recommend that you consult with a tax professional before acting on advice that the paid points may be deducted on your federal income taxes.

Another cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you'll deduct from your taxes. We can help you do the math! Call us at 504-866-5626.

Most borrowers find that the savings per month quickly outweigh the up-front cost of refinancing. We can help you figure out your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the next couple of years, and your money on hand. Call us at 504-866-5626 to get started.

Want to know more about refinancing? Call us: 504-866-5626.

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