Is Refinancing Worth the Cost?
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It has been said that only when your new interest is at least 2 points below your current rate, should you refinance your mortgage. That may have been valid a while back, but with refinancing dropping in cost recently, it is never the wrong time to explore the options of a new mortgage loan! Refinancing your loan has a variety of advantages that often make it worth the initial expenditure many times over.
You may be able to lower your interest rate (sometimes by a lot) and reduce your mortgage payment amount with a refinanced mortgage. You also might have the option of tapping into your home equity by "cashing out" a sum of money to remodel your home, consolidate debt, or take your family on a vacation. You could be able to refinance to a shorter-term mortgage, enabling you to build your equity faster.
Of course, you will have to pay for your the refinance process. You will be charged the same kinds of fees as with your existing home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might look into paying points to be given a reduced interest rate. When you pay (on average) 3% of the loan amount up front, your savings for the life of the new mortgage loan can be significant. Please consult with a tax professional before acting on rumors that the points paid may be deducted on your federal income taxes.
Another thing about taxes is that when your interest rate is lowered, naturally you'll also be reducing the interest amount that you can deduct on your federal income taxes. This is another expense that borrowers take into account. We can help you do the math! Call us at 504-866-5626.
Most borrowers find that the savings per month quickly outweigh the initial cost of refinancing. We'll work with you to determine what mortgage program is ideal for you, considering your cash on hand, how likely you are to sell your house in the near future, and how refinancing might effect your taxes. Call us at 504-866-5626 to get started.
Want to know more about refinancing? Give us a call at 504-866-5626.
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