When is Refinancing Worth it?

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Some have said that only when your new interest will be at least two points under your current rate, should you refinance your mortgage. That may have been true a while back, but with refinancing dropping in cost over the last few years, it's a good time to consider a new loan! Refinancing your loan has some advantages that can make it worth the initial expenditure a few times over.

Advantages

When you refinance, you might be able to lower the interest rate and mortgage payment , sometimes considerably. Additionally, you could have the option of tapping into the equity in your house by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. You may have the option to refinance into a shorter-term mortgage, enabling you to add to your equity faster.

The Cost

All these advantages do come with some expense, though. When you refinance, you're paying for basically the same things you paid for at the time you obtained your current mortgage. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to be given a better interest rate. The money you'll save over the life of the loan might be substantial if you've paid up front about 3% of the new loan total. You may be told that points may be deducted on your income taxes, but as tax regulations are ever-changing, we urge you to speak with your tax professional before depending on this.

Another thing about taxes is that if you lower your interest rate, it follows that you will also be reducing the paid interest amount that you can deduct on your federal income taxes. This is one more cost that some borrowers take into consideration. We can help you do the math! Call us at (305) 891-6500.

Ultimately, for most borrowers the amount of initial costs to refinance will be made up soon in monthly savings. We'll work with you to find out which mortgage program is perfect for you, taking into account your cash on hand, the likelihood of selling your home in the next few years, and how refinancing can effect your taxes. Call us at (305) 891-6500 to get started.

Want to know more about refinancing? Give us a call: (305) 891-6500.