When is Refinancing Worth it?

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It has been said that only in the case your new interest will be at least two points lower, should you refinance your loan. Perhaps several years ago that was sage advice, but as refinance costs have been falling recently, it could be a good time to take a serious look. A refinanced mortgage may be worth its cost many times over, factoring in the benefits that it brings, along with a lower interest rate.

Advantages

When you refinance, you could be able to lower your interest rate and monthly mortgage payment , perhaps by a lot. You also might have the option of pulling out some of the equity in your property by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You might be able to refinance into a shorter-term mortgage program, enabling you to build up your home equity quicker.

Expenses and Fees

All of these benefits do come with some expense, though. With your refinance, you're paying for basically the same things you paid for during your current mortgage loan. Included in your costs can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

Paying points can help you attain a lower interest rate. Your savings over the life of the mortgage loan might be substantial if you've paid up front about three percent of the new loan balance. Please consult a tax professional before acting on rumors that any points paid can be deducted on your taxes.

Speaking of taxes, once your interest rate is reduced, of course you will also be reducing the interest amount that you will be able to deduct on your federal income taxes. This is one more cost that borrowers consider. Call us at 504-866-5626 to help you do the math.

Most people find that the monthly savings quickly outweigh the initial cost of refinancing. We'll help you determine which mortgage program is right for you, looking at your cash on hand, how likely you are to sell your residence in the next few years, and the effect refinancing could have on your taxes. Call us at 504-866-5626 to get you started.

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

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