Weighing the Options of Refinancing

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It has been said that only in the case your new interest will be at least two points under your current rate, should you refinance your loan. Perhaps several years ago that was wise advice, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing your loan has various benefits that often make it worth the initial cost a few times over.

Benefits

When you refinance, you could have the ability to lower the interest rate and monthly payment , sometimes considerably. Additionally, you might have the option of tapping into your home equity by "cashing out" some funds to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance to a shorter-term mortgage loan, enabling you to add to 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 current mortgage. These might include settlement costs, appraisal fees, lender's title insurance, underwriting fees, and so on.

Do the Math

You might investigate paying points to get a reduced interest rate. Your savings over the life of the mortgage could be substantial if you have paid up front about three percent of the new loan balance. You might be told that the points can be deducted on your income taxes, but since tax regulations are difficult to keep up with, please speak with a tax professional before making any decisions based on this.

Another thing about taxes is that when your interest rate is reduced, it follows that you will also be reducing the interest amount that you may deduct on your taxes. This is another expense that borrowers consider. Call us at 504-866-5626 to help you do the math.

Most people find that the savings per month quickly outweigh the initial expenses of refinancing. We'll work with you to determine which mortgage loan program is the best fit for you, looking at your cash on hand, how likely you are to sell your house in the next few years, and how refinancing might effect your taxes. Call us at 504-866-5626 to get started.

Curious about refinancing? Call us: 504-866-5626.

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