Weighing the Options of Refinancing

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Ever hear the pearl of wisdom that says you should only consider refinancing if the new interest rate will be at least two points lower than your present one? That could have been good advice a while back, but as refinancing has been costing less recently, it's a good time to explore the options of a new mortgage loan! Refinancing your mortgage has various benefits that will often make it worth the up-front cost many times over.

Advantages

You might be able to bring down your interest rate (sometimes substantially) and reduce your monthly payment amount with a refinanced mortgage. Additionally, you might be given the option of pulling out some of your home equity by "cashing out" some money to fix up your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also get the chance to build your home equity more quickly by moving to a shorter term mortgage loan.

Expenses and Fees

As you probably know, you'll have to pay for the the refinance process. With your refinance, you're paying for a lot of the same things you were charged for at the time you obtained your existing mortgage. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Do the Math

Paying points can result in a better interest rate. If you pay (on average) 3% of the loan amount up front, your savings for the term of the new loan can be great. You may hear that these points can be deducted on your income taxes, but since tax regulations can be ever-changing, we urge you to consult your tax professional before considering this in your calculations.

One more cost that a borrower might take into account is that a reduced rate of interest will lower the interest amount you will deduct from your taxes. We can help you do the math! Call us at (305) 535-2230.

All things considered, for most borrowers the total of up-front costs to refinance are made up soon in monthly savings. We'll help you figure out which mortgage loan program is ideal for you, taking into account your cash on hand, the likelihood of selling your residence in the near future, and the effect refinancing may have on your taxes. Call us at (305) 535-2230 to get you started.

Curious about refinancing your home? Call us at (305) 535-2230.

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