Weighing the Options of Refinancing

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Have you ever heard the pearl of wisdom that states you should only consider refinancing if the new interest rate is at least two points below your existing one? That could have been accurate years ago, but with refinancing dropping in cost in recent years, it's a good time to consider a new mortgage! A refinance is often worth its cost several times over, because of the advantages that may come, in addition to a lower interest rate.

Advantages

When you refinance, you might have the ability to lower the interest rate and monthly mortgage payment , sometimes by a lot. You could also be able to "cash out" some of the built-up equity in your home, which you can use to consolidate debt, make home improvements, or finance a vacation. With lower interest rates, you might also get the chance to build up home equity more quickly by moving to a shorter-term loan.

Expenses and Fees

All of these advantages do cost something, though. You'll have to pay the same sort of fees as with your current mortgage loan. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might investigate paying points to reduce your interest rate. Your savings over the life of the mortgage loan could be significant if you have paid up front about 3% of the new loan total. You might have heard that points may be tax deductible, but because tax regulations can be ever-changing, we urge you to consult your tax professional before depending on this.

Another thing about taxes is that once your interest rate is lowered, naturally you'll also be reducing the paid interest amount that you will be able to deduct on your taxes. This is another cost that some borrowers take into account. We can help you do the math! Call us at 504-866-5626.

Most people find that the savings per month outweigh the initial cost of refinancing. We'll help you figure out which mortgage loan program is right for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and how refinancing might effect your taxes. Call us at 504-866-5626 to get started.

Curious about refinancing your home? Give us a call at 504-866-5626.

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