When is Refinancing Worth it?

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Some have said that only when your new interest will be at least two points below your current rate, should you refinance your loan. That may have been true years ago, but with refinancing dropping in cost recently, it is a good time to consider a new loan! Refinancing your mortgage loan has various benefits that will often make it worth the up-front cost a few times over.

Benefits

When you refinance, you might be able to reduce your interest rate and monthly mortgage payment , perhaps significantly. Additionally, you may have the option of pulling out some of your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. You might be able to refinance to a shorter-term mortgage loan, giving you the ability to build your equity quicker.

The Cost

Of course, you'll have to pay for your the refinance process. When you refinance, you are paying for basically the same things you paid for during your original mortgage. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.

Doing the Math

You could offer to pay discount points (prepaid interest) to get a more favorable interest rate. When you pay (on average) three percent of the loan amount up front, the savings for the life of the refinanced loan can be significant. Please talk to a tax professional before acting on hear-say that these paid points may be deducted on your taxes.

Another thing about taxes is that once you reduce your interest rate, of course you will also be reducing the paid interest amount that you may deduct on your federal income taxes. This is one more expense that some borrowers consider. Call us at 623-340-0934 to help you do the math.

Most people find that the monthly savings quickly outweigh the up-front expenses of a refinance. We can help you find out what your options are, considering the effect a refinance may have on your taxes, how likely you might be to sell in the next couple of years, and your money on hand. Call us at 623-340-0934 to get you started.

Want to know more about refinancing your home? Call us: 623-340-0934.

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