Is Refinancing Worth the Cost?
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Ever heard the pearl of wisdom that states you should only consider refinancing if your new interest rate will be at least 2 points lower than your existing one? Maybe several years ago that was good advice, but as refinance costs have been falling recently, it may be time to look into it. Refinancing has a number of advantages that can make it worth the up-front expenditure a few times over.
Advantages of Refinancing
When you refinance, you could have the ability to lower your interest rate and monthly mortgage payment , perhaps by a lot. You may also have the ability to "cash out" some of your home equity, which you may use to consolidate debts, make home improvements, or finance a vacation. You may be able to refinance to a shorter-term mortgage loan, enabling you to add to your home equity quicker.
Fees and Expenses
As you probably expect, you will have some fees and expenses during your process of refinancing. You'll have the same kinds of expenses and fees as with your present mortgage loan. These probably include settlement costs, an appraisal, lender's title insurance, underwriting fees, and so on.
Doing the Math
Paying discount points can get you a lower interest rate. Your savings on the life of the mortgage loan could be significant if you've paid up front about 3% of the new loan total. Please talk to a tax professional before acting on hear-say that any paid points can be deducted on your taxes.
Another cost that a borrower may take into account is that a lower interest rate will reduce the interest amount you'll be able to deduct on your federal income taxes. We can help you do the math! Call us at 847-278-7220.
Most borrowers find that the savings per month quickly outweigh the initial cost of refinancing. We can help you find out your options, considering the effect a refinance might have on your taxes, how likely you may be to sell in the next couple of years, and your money on hand. Call us at 847-278-7220 to get you started.
Curious about refinancing your home? Call us: 847-278-7220.