Weighing the Options of Refinancing
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Some have said that only when your new interest is at least two points below your current rate, should you refinance your loan. Maybe that was sound advice several years ago, but since refinance costs have been getting lower, it could be a good time to look into it. Refinancing your mortgage loan has a variety of benefits that often make it worth the up-front expenditure a few times over.
Benefits
When you refinance, you might have the ability to lower your interest rate and monthly mortgage payment amount, perhaps by a lot. You also might be given the option of pulling out some of the equity in your house by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. You could have the option to refinance to a shorter-term mortgage, giving you the ability to build your home equity faster.
Expenses and Fees
As you probably know, you will have to pay for the the refinance process. You'll have the same sort of fees as with your current home loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
Paying discount points can help you get a lower interest rate. When you pay (on average) three percent of the loan amount initially, the savings for the term of the refinanced loan can be great. We recommend that you consult a tax professional before acting on advice that the paid points may be deducted on your taxes.
One more expense that borrowers may take into account is that a reduced interest rate will lower the interest amount you'll deduct on your taxes. We can help you do the math! Call us at 516 536-2525.
Most borrowers find that the monthly savings outweigh the initial cost of refinancing. We can help you explore your options, considering the effect a refinance could have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at 516 536-2525 to get started.
Curious about refinancing? Give us a call: 516 536-2525.
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